:AL  COST  SYSTEM 


PRINTING 


R.T.  PORT]: 


o  c/ 


The  Practical  Cost  System 
for  Printing  Offices 


BY 

R.  T.  PORTE 

h 
Author  of  "How  to  Figure  Costs  in 

the  Printing  Business"- 
Compiler  of  "Franklin  Printing  Price  List" 


REVISED  EDITION 


Copyright  1920 
PORTE  PUBLISHING  COMPANY 

SALT  LAKE  CITY 
UTAH 


TO  the  grand  fellowship  of  the 
Printing  Craft,  without  whose  wis- 
dom, knowledge,  craftsmanship,  and 
business  acumen,  the  great  world  of 
letters,  literature  and  art,  and  the  vast 
energies  of  commercial  life  would  still 
be  groping  their  way  through  the 
shadows  of  the  dark  ages,  this  book  is 
most  respectfully  dedicated. 


FOREWORD 


IN  PRESENTING  this  revised  edition  of  the  Practi- 
cal Cost  System  for  the  consideration  of  the  printing 
craft,  we  are  but  responding  to  a  continued  and  in- 
creasing demand  for  an  accurate,  inexpensive  and 
simple  system  of  finding  cost  of  production  in  the 
medium  and  small  printing  offices. 

The  universal  satisfaction  expressed  by  the  users  of 
the  first  edition  of  this  book  has  convinced  the  pub- 
lishers that  a  revised  edition,  brought  fully  up  to  date, 
replete  with  modern  ideas,  and  equipped  with  the  latest 
and  simplest  forms,  would  meet  with  an  even  more 
enthusiastic  reception. 

There  are  no  ideas  or  forms  in  this  revised  edition 
but  what  have  been  thoroughly  tried  out  and  tested  in 
actual  use  and  found  to  be  entirely  satisfactory  before 
being  incorporated  in  this  edition  of  the  Practical  Cost 
System. 

The  original  edition  of  this  Practical  Cost  System 
was  the  very  first  attempt  ever  made  to  put  cost-find- 
ing for  printing  offices  into  book  form. 

The  first  edition  was  prepared  some  twelve  years 
ago  by  Mr.  Roy  T.  Porte,  then  the  head  of  the  Porte 
Printing  Company,  of  Fargo,  North  Dakota,  assisted 
by  some  other  cost  enthusiasts,  who  even  then  saw  in 


iv  THE  PRACTICAL  COST  SYSTEM 

cost-finding  the  salvation  of  the  printing  business — the 
book  was  published  soon  after  the  work  of  preparation 
was  completed.  When  this  first  edition  was  published 
there  was  no  other  book  on  the  subject  of  cost-finding 
in  printing  offices  in  existence. 

There  was,  at  that  time,  no  other  cost-finding 
system  for  printing  offices  known,  except  the  system 
previously  worked  out  and  installed  in  a  few  printing 
offices  in  the  city  of  Minneapolis,  Minnesota,  by  Mr. 
Robert  F.  Denham,  to  whom  must  be  given  the  full 
credit  of  being  the  father  of  all  real  cost-finding 
systems  as  applied  to  the  printing  business.  Mr.  Den- 
ham's  system  was,  however,  too  cumbersome  and  too 
full  of  details  to  be  used  successfully  in  the  medium  and 
smaller  printing  offices,  and  this  early  book  of  Mr. 
Forte's  was  a  successful  attempt  to  simplify  the  Den- 
ham  system  and  also  to  so  arrange  its  methods  and 
forms  as  to  make  it  applicable  to  the  smaller  printing 
offices  where  the  publishing  of  a  daily  or  weekly  news- 
paper was  combined  with  the  production  of  commercial 
printing. 

This  book  met  with  instant  success,  but  being  the 
first  book  on  cost-finding  for  printing  offices  ever  pub- 
lished, a  pioneer  in  the  field,  it  contained  a  few  errors 
of  method  and  application.  These  errors,  however, 
were  quickly  discovered  and  reported,  and  those  por- 
tions of  the  book  were  at  once  changed  and  a  corrected 
edition  sent  out,  which  was  still  the  first  book  on  cost- 
finding  in  printing  offices  in  the  field  and  the  only  one 
on  the  subject  for  several  years. 

The  advent  of  a  convenient,  complete  and  mathe- 
matically accurate  Selling  Price  List  for  the  products 


FOREWORD  v 

of  the  printing  office,  has,  for  a  short  time,  drawn  the 
attention  of  the  craft  away  from  the  necessity  of  in- 
stalling a  cost  system  to  determine  the  production 
costs  in  their  own  plants.  They  are  now,  however, 
awakening  to  a  realization  that  a  cost  system  will  not 
only  give  them  a  knowledge  of  their  own  production 
costs,  but  will  also  give  a  much  needed  check  on  the 
efficiency  of  their  plants  in  all  departments,  of  their 
employees  and  of  the  entire  administration,  in  both 
shop  and  office,  of  their  business  as  a  whole.  Further 
than  this  they  also  realize  that  a  cost  system  will  show 
them  the  discrepancies,  extravagances,  and  leaks  in 
the  business  and  its  administration — all  of  which  make 
serious  inroads  into  the  profits.  This  realization  has 
created  a  continuous  and  increasing  demand  for  a  new 
and  revised  edition  of  the  Practical  Cost  System,  which 
we  are  now  presenting  to  the  craft. 

The  author  wishes  to  express  his  sincere  thanks  to 
the  many  friends  and  supporters  who  have  so  freely 
contributed  of  their  ideas  and  experiences  in  aiding  in 
the  perfecting  of  the  revision  of  this  book;  especially 
to  Mr.  George  E.  Wray  for  his  careful  and  painstaking 
editing  of  the  text ;  to  Mr.  Frederick  W.  Smith  for  his 
thorough  and  scientific  work  in  rewriting,  checking  and 
editing  the  technical  portions  of  the  book;  and  to  all 
those  others  who  have  by  their  confidence  and  support 
made  this  edition  possible. 

We  cannot  claim  that  this  Practical  Cost  System  is 
absolutely  perfect  and  complete,  for  the  science  of  cost- 
finding,  like  all  sciences,  is  subject  to  the  law  of  evolu- 
tion, and  new  ideas  and  new  methods  are  constantly 
presenting  themselves.  We  can  and  do  claim,  however, 


vi  THE  PRACTICAL  COST  SYSTEM 

that  this  revised  edition  of  the  Practical  Cost  System  is 
far  in  advance  of  any  book  on  the  subject  of  cost- 
finding  in  printing  offices  now  on  the  market.  As  new 
ideas  and  methods  appear  they  will  be,  when  thor- 
oughly tried  and  tested,  incorporated  in  future  editions 
of  this  book. 

We  are  now  submitting  this  Practical  Cost  System 
to  our  fellow  members  of  the  printing  craft  with  the 
sincere  hope  that  they  may  find  it  of  the  greatest 
material  benefit  in  their  business  and  a  very  helpful  aid 
in  the  solving  of  the  problems  of  their  production  costs. 
Yours  very  sincerely, 

THE  AUTHOR. 
November,  1920 


THE  PRACTICAL  COST  SYSTEM  FOR 
PRINTING  OFFICES 


INTRODUCTION 


A  cost  system  is  like  a  building — each  part  com- 
plete in  itself — the  parts  to  be  erected  one  upon  the 
other,  until  they  constitute  a  finished  structure.  The 
building  may  be  elaborate,  many  little  touches  given 
to  it  here  and  there,  niceties  of  finish,  and  extras  of  all 
kinds ;  all  very  fine  for  those  who  wish  something  elab- 
orate. The  elaboration  may  be  carried  to  an  extreme, 
but  the  fundamentals  of  sound  business  structures  are 
all  the  same. 

There  has  been  a  need  of  a  cost  system  structure, 
with  the  fewest  frills ;  one  that  is  simple,  complete  and 
accurate.  A  plan  that  can  be  understood  and  carried 
out  along  the  simplest  lines  to  give  accurate  results. 
This  has  been  the  aim  of  the  compiler  and  he  describes 
a  system  that  will  meet  the  needs  of  the  great  majority 
of  printers,  those  employing  ten  or  less  employees. 
But,  not  to  be  misunderstood,  this  system  is  capable  of 
being  extended,  with  but  a  few  changes,  larger  forms, 
etc.,  and  will  then  fit  any  printing  plant  in  existence. 

The  blanks  here  shown,  are  especially  intended  for 
the  use  of  the  smaller  shops,  and  particularly  those 


2  fftE  PRACTICAL  COST  SYSTEM 

publishing  weekly  or  daily  newspapers  in  connection 
with  job  offices,  where  there  are  no  hard  and  fast  lines 
as  to  employees  working  in  only  one  department,  and 
where  the  work  of  the  employees  is  liable  to  be  of  a 
mixed  nature. 

A  careful  reading  of  the  descriptions  and  study  of 
the  forms,  with  an  earnest  determination  on  the  part  of 
the  user,  will  give  results;  you  can  install  as  good  a 
cost  system  in  your  own  plant  as  can  possibly  be  in- 
stalled and  without  engaging  an  expensive  cost  expert. 

Over  a  hundred  different  forms  were  examined, 
and  a  practical  tryout  of  the  system  made  before  it 
was  offered  to  the  printers.  It  is  now  in  use  in  all 
kinds  and  sizes  of  printing  offices,  from  a  one-man 
shop  to  a  shop  having  typesetting  machines,  cylinder 
presses,  job  presses,  and  a  complete  bindery,  and  in 
others  where  a  daily  and  weekly  newspaper  is  pub- 
lished. In  all  this  range,  there  has  not  been  a  failure  in 
its  findings  where  the  system  has  been  carried  out 
according  to  instructions ;  everyone  has  been  satisfied 
and  more  than  pleased. 

This  is  written  to  impress  you  with  the  idea  that 
you  need  not  be  afraid  to  try  it;  it  will  work,  and  do 
everything  any  cost  system  will  do  in  any  plant  and 
without  individual  expert  cost  instruction. 

In  order  that  you  may  distinguish  plainly  the  items 
of  expense  involved  in  the  production  of  a  job  of  print- 
ing, we  insert  here  this  diagram.  (Cut  number  12.) 

This  diagram  fully  illustrates  all  the  items  that 
enter  into  the  cost  of  a  job  of  printing,  and  the  relation- 
ship which  each  item  of  cost  bears  to  every  other  item, 
and  also  the  relation  of  the  whole  to  the  selling  price. 


u 

1 


£ 


si 

* 

r 


4  THE  PRACTICAL  COST  SYSTEM 

It  is  well  worth  close  study,  because  of  its  graphic 
portrayal  of  the  costs  of  producing  a  job  of  printing  in 
their  relative  order.  It  plainly  shows  each  increment 
of  cost  added  to  the  job  in  its  progress  through  the 
factory  and  their  accumulation  into  the  total  cost,  profit 
and  selling  price. 

The  Stock  or  Merchandise  group  is  shown  on  the 
right.  The  guide  line  shows  the  direct  connection  of 
the  job  of  printing  through  stock  to  cost.  The  smaller 
squares  attached  to  the  stock  square  give  force  to  the 
fact  that  cost  of  stock  is  the  price  paid  plus  the 
handling  cost. 

The  central  group  shows  the  Time  Used  as  the  first 
item  of  cost,  and  this  is  directly  connected  with  labor, 
showing  that  labor  cost  is  a  burden  on  the  Time  Used 
for  the  job  of  printing.  Labor  cost  is  made  up  of  the 
price  paid  for  labor  plus  the  cost  of  the  non-chargeable 
time  as  shown  in  the  diagram.  The  non-chargeable 
hours  in  a  factory  are  carried  by  labor  and  so  add  to  the 
cost  of  the  productive  labor-hour. 

The  third  group  at  the  left  is  the  Investment  group. 
Investment  cost  is  made  up  of  rent  and  direct  expense 
plus  depreciation  and  interest.  The  line  from  Time 
Used  to  Investment  indicates  that  this  expense  is  also 
a  burden  on  the  time  used.  The  line  running  from 
Investment  to  Labor  demonstrates  that  labor  cost  plus 
investment  expense  makes  up  the  actual  cost  of  the 
time  used  on  the  job  of  printing. 

The  short  line  connecting  these  two  groups  with 
Office  Expense  indicates  that  to  the  cost  of  time  used 
must  be  added  an  increment  of  office  expense  to  com- 
plete the  manufacturing  cost.  To  this  cost  square  the 


MANUFACTURING  OVERHEAD 


line  from  the  Stock  or  Merchandise  group  also  leads  to 
complete  the  cost  of  the  job.  To  cost  is  attached  the 
profit  and  to  profit  the  selling  price. 

This  diagram  fully  illustrates  the  line  of  relation  - 
ship  of  all  the  items  which  the  cost  of  a  job  must 
include,  and  also  the  relationship  of  the  cost,  the  profit 
and  the  selling  price. 

The  following  diagram  shows  the  typical  elements 
of  Burden  or  Overhead  Expense  in  a  printing  plant  as 
used  in  the  Practical  Cost  System  for  Printing  Offices. 
A  study  of  these  expense  relations  will  make  clear  the 
general  principles  involved  in  the  classification  and 
distribution  of  the  various  items  of  Manufacturing 
Burden  or  Overhead  Expense : 

Equipment  Charges 
Insurance 
Taxes 

Interest  on  Investment 
Depreciation 

Rent  and  Heat — Factory 

Direct  Department  Expense 

Department  Payroll 

Department  Supplies 
Repairs  to  Equipment 
General  Factory  Supplies 
Non-Productive  Labor 
Power 

Fuel  Cost 

Labor  Cost 

Power  Plant  Supplies 

General  Superintendence 
Proprietor's  Salary 
Office  Payroll 
Estimating  Department 
Cost-finding  Department 
General  Office  Expense 

The  Total  Manufacturing  burden  is  made  up  of  the 
Productive  Center,  or  shop,  burden  and  the  Adminis- 


(Fixed 

Charges 

Productive 

Center 

Burden  or 

Overhead 

Total 

Operating 
"    Charges 

Manufacturing- 
Burden  or 

Overhead 

Administrative 

Burden  —  Overhead 

6  THE  PRACTICAL  COST  SYSTEM 

trative,  or  office,  burden.  The  Productive  Center  bur- 
den is  made  up  of  the  Fixed  Charges  and  the  Operating 
Charges.  All  these  items  of  the  fixed  charges  are  in- 
cluded in  the  cost  of  operation  of  every  printing  office, 
however  small,  as  are  also  all  the  items  of  the  operating 
charges  except  that  sub-items  under  power  would  not 
be  used  in  many  plants.  Under  Administrative  burden, 
the  item  of  general  superintendence,  would  be  used 
only  in  the  largest  plants  where  a  superintendent  has 
general  supervision  not  only  of  the  plant  but  also  of  the 
selling  and  a  part,  at  least,  of  the  business  of  the  office. 
The  item  of  propietor's  salary  should  appear  in  every 
plant,  large  or  small,  although  if  he  works  in  the  shop 
his  salary  would  appear  on  the  shop  pay  roll  to  the 
amount  of  his  labor  in  that  department.  The  estimat- 
ing and  cost-finding  items  may  be  combined  with  other 
office  work  and  so  not  appear  as  separate  items  in  the 
cost  charges  in  medium  and  small  shops,  but  this  work 
should  be  considered  as  a  part  of  the  administrative 
burden 


CHAPTER  I 


THE  WORKING  OF  THE  SYSTEM 


As  every  building  must  be  erected  on  suitable 
ground,  so  as  to  be  able  to  stand,  a  cost  system  must 
have  ground  to  build  upon ;  the  groundwork  here  is  a 
Job  Register. 

The  Job  Register:  The  simplest  form  possible  is 
used  for  the  Job  Register.  The  first  space  is  the  place 
for  the  number  of  the  job.  Each  job  going  through  the 
office  must  bear  a  number,  and  the  Job  Register  is 
used  to  make  sure  there  is  no  repetition  of  numbers 
and  no  unrecorded  jobs.  The  first  job  in  the  illustration 
of  the  Register  is  for  a  weekly  newspaper.  The  other 
jobs  are  a  miscellaneous  collection  of  work  such  as 
come  into  any  office.  Where  a  price  is  given  in  ad- 
vance, it  is  so  recorded,  and  that  there  may  be  no 
question  about  the  price  at  the  time  of  settlement. 
Cut  number  1,  on  page  eight,  illustrates  a  simple,  yet 
complete,  form  of  a  Job  Register  which  contains  all  the 
necessary  record  details. 

The  Job  Register  is  your  ground,  and  from  the  jobs 
placed  on  it,  the  structure  is  to  be  built.  The  first 
thing  is  the  foundation,  and  that  foundation  is  the  Job 
Ticket. 


JOB  REGISTER 


Date 


Description 


Price 


Numbp 


FOR 


Date 


Quantity  1  Description 


t  too  o 


Price 


Numb 


FOR 


^ate 

5-3 


Quantity 


riptiori 


Price 


J3 

3 
£ 


''jmber 


FOR 


Date 


Quantity 

QOO 


Desertion 


Price 


Number/ 


FOR 


»/£>. 


.Date 


Quantity 


Description 


Price 


NumbeC 

/or 


FOR 


^*Js&CA 


Date 


Quantity 


Description 


Price 


"Number 

J££ 


FOR 


Date 


Quantity 


Description 


y<rC. 


-  A  -  ^  X  ^ 


Price 


FOR 


M£ 


Date 


Quantity       Descriptiotr 


Price 


JOB  TICKET  EXPLAINED  9 

Job  Ticket :  The  foundation  must  be  solid,  it  must 
be  simple  and  complete.  There  is  no  need  of  fancy 
trimmings,  only  the  essentials.  This  Job  Ticket  is  the 
simplest  form  that  can  be  devised,  yet  so  well  laid  that 
it  will  carry  the  entire  structure.  Cuts  numbers  2 
and  3,  on  pages  11  and  13. 

The  four  great  walls  of  the  printing  business  are 
the  Stock  (merchandise  or  printing  paper),  the  Com- 
posing Room,  Press  Room  and  the  Bindery.  These  are 
the  primates,  and  there  is  no  plant,  however  small,  but 
has  these  walls  of  the  printing  plant.  The  stock  is 
first,  that  is  necessary  in  order  to  print ;  the  composing 
room  handles  the  type,  the  presses  print,  and  finally 
the  bindery  tabs  the  work,  or  folds  it,  trims  it,  or 
wraps  it  for  delivery  and  puts  on  the  finishing  touches. 

To  begin  the  work  right  the  Job  Ticket  must  have 
space  to  tell  all  the  particulars  about  the  work  to  be 
done  in  any  of  the  departments.  It  contains  the  date 
the  job  was  received,  and  the  job  number — the  same  as 
entered  on  the  Job  Register;  whom  the  job  is  for,  with 
address,  quantity,  and  general  description,  whether 
booklets,  letterheads,  envelopes,  cards,  folders,  cata- 
logs, or  whatever  the  job  may  be.  Then  follows  the 
date  when  the  work  is  promised,  right  where  it  cannot 
escape  notice,  so  that  the  work  may  be  finished  on  time. 

The  Stock  description  needs  no  special  rulings,  or 
diagrams,  just  a  plain  space  where  the  description,  size 
and  weight  of  paper  to  be  used,  can  be  placed.  If  it  is 
dodgers  or  hand-bills,  "print  paper,  size  7x9,"  conveys 
all  that  is  necessary;  if  envelopes,  the  wholesale  or 
grade  number,  size  of  the  envelope,  etc.  A  simple 
blank  space  is  all  that  is  necessary,  and  the  printer  can 


10  THE  PRACTICAL  COST  SYSTEM 

write  the  description  in  terms  with  which  he  is  most 
familiar. 

The  Composition  section  has  a  little  more  definite 
wording.  If  the  job  is  to  be  an  exact  reprint,  a  ring 
around  the  words  "Like  Copy"  tells  the  story.  If  the 
printer  cannot  duplicate,  and  has  a  little  leeway  a  ring 
around  the  words  "Like  Sample  as  Near  as  Possible" 
is  all  the  description  needed.  Cut  number  2.  If  the 
.  stone  proof  is  to  go  to  any  particular  person,  his  name 
only  is  necessary,  and  if  a  revised  proof  is  to  go  to  the 
customer  or  anyone  else,  room  is  provided.  Cut  num- 
ber 3.  If  the  copy  is  manuscript,  a  ring  around  the 
different  lines  gives  the  compositor  an  idea  as  to  the 
setting  of  the  job.  Cut  number  3.  Any  particular 
instructions,  such  as  width  to  set  job,  if  a  booklet  or 
pamphlet,  size  and  style  of  type  to  be  used,  size  of  type 
page,  and  whether  to  run  in  one  or  two  colors,  can  all 
be  indicated.  Cut  number  3.  This  is  the  simplest  way ; 
all  the  essentials  to  the  correct  setting  of  the  job  can  be 
easily  given,  from  an  envelope  corner  to  a  large  catalog, 
with  no  confusing  detail. 

The  Press  Work  space  is  boiled  down  to  but  two 
special  places.  One  for  color  of  ink,  and  one  to  desig- 
nate to  whom  the  press  proof  shall  be  shown.  Cut 
number  2.  The  rest  of  the  space  is  blank,  but  its  uses 
are  manifold.  Here  can  be  told  on  what  press  to  put 
the  job ;  whether  a  cheap  or  high-grade  job ;  whether  to 
run  "work-and-turn"  and  any  other  special  instructions. 
The  workmen  in  the  smaller  shops,  especially  the  small 
town  shops,  are  closer  to  the  customer,  and  know  what 
he  desires,  so  there  is  no  need  of  a  lot  of  diagrams  or 
special  spaces,  which  only  confuse. 


NOTE:— Ticket  must  be  mad*  «ut  In  full,  aivlnft  every  Information  aeceeMrjr  for 
completion  «r  fob.  U«fe  •  c*rbon  i»p«r  and  detach  and  file  record.  Number  every  job. 


Date 


No. 


102. 


For 


Address 


Quantity 

/OOP 


DESCRIPTIOI^K 


PROMISED 


STOCK 


COMPOSITION 


I  Like  Copy 


I  Sample 
I  as  Near  as' 
iPossibIe> 


Heavy 
Light 
Fancy 
Plain 
Nice  Job 
Cheap  Job 


Stone  Proof  to 


<u 
.a 


Revise  to 


PRESS  WORK. 


Color  Ink 


Proof  to 


BIND 


Block 


Perforate 


Deliver 


Delivered  by 


To  Be  Called  for 


.Ship  by 


Via 


Price 


Cost  of 

Stock 

PorforiMltMat  Co- Salt  Late 


Journal 


12  THE  PRACTICAL  COST  SYSTEM 

The  Bindery  in  the  average  small  office  is  perhaps 
the  least  used  department  of  the  shop,  but  the  three 
most  important  and  used  operations  have  spaces.  If 
the  work  is  to  be  put  in  tabs  or  pads,  room  is  provided 
for  that  ;  if  to  be  perforated,  there  is  a  space  where  only 
a  check  mark  is  needed,  and  if  the  work  is  to  be  num- 
bered, the  first  number  only  is  necessary  to  be  put  in 
the  place. 

The  Delivery  of  the  work  is  important,  and  spaces 
are  left  to  denote  whether  work  is  to  be  delivered  or 
called  for,  and  date  delivered,  and  by  whom.  If  the 
product  is  to  be  shipped,  there  is  room  for  instructions. 
Cut  number  3. 

The  very  reason  for  doing  the  job  —  the  price  —  has  a 
place,  and  then  a  space  for  the  cost  of  the  stock  used. 
And,  last  of  all,  a  space  for  the  Journal  page  when  the 
job  is  entered  upon  the  books.  An  important  feature  of 
the  Job  Ticket  is  that  it  is  made  in  two  parts.  The  first 
is  a  fly  sheet,  cut  number  2,  tipped  on  over  a  duplicate 
Job  Ticket  printed  on  the  Job  Envelope,  cut  number  3. 
The  reverse  of  the  fly  sheet  is  a  Job  Record,  cut  num- 
ber 7.  When  the  Job  Ticket  is  made  out,  a  sheet  of 
carbon  paper  is  placed  between  the  Job  Ticket  fly 
sheet  and  the  Job  Ticket  envelope,  and  then  the  direc- 
tions and  particulars  of  the  job  are  written  out,  all 
except  the  price,  which  is  not  usually  carboned  on  the 
Job  Envelope.  The  fly  sheet  is  detached  from  the 
envelope,  and  placed  in  a  ring  binder.  The  number  of 
the  job  is  again  entered  on  the^reverse  or  Job  Record 
the_  fly  sheet  in  the  space  left  for  thaFpurpose. 


This  Job  Record  remains  in  the  ring  binder,  is  kept  in 
the  office  and  placed  in  the  safe  at  night,  as  it  will  soon 


NOTE:— Ticket  must  be  made  out  In  full,  giving  every  Information  necessary  for 
completion  or  Job.  Use  a  carbon  paper  and  detach  and  file  record.  Number  every  Job. 


Date 


No. 


Address  \J 


Quantity 


5oo 


DESCRIPTION 


PROMISED 


STOCK 


3^x36  — fo 


COMPOSITION 


Like  Copy 

Like 
Sample 
as  Near  as 
Possible 

Machine 


Stone  Proof  to 


Revise  to 


PRESS  WORK 


_ 
( 


Color  Ink 


Proof  to 


BIND 


Block 

In  a  Pad 


Perforate 


No. 


Deliver 


Delivered 


Delivered  by 


To  Be  Called  for 


Ship  by 


'Via 


Price 


Cost  of 
Stock 


Journal 


Port*  Pufellthlac  Co.  Silt  Lik« 


14  THE  PRACTICAL  COST  SYSTEM 

contain  records  as  valuable  as  those  in  the  ledger  or 
books  of  account.  This  Job  Record  will  be  fully  ex- 
plained further  on. 

In  the  Job  Envelope — the  second  part  of  the  Job 
Ticket — is  placed  the  copy  for  the  Job,  and  having  on 
its  face  all  the  instructions  for  printing,  goes  to  the 
stock  room,  where  the  stock  is  cut,  or  ordered  from  the 
paper  dealer;  then  to  the  composing  room  where  the 
job  is  set;  to  the  press  room  where  the  job  is  printed, 
and  to  the  bindery  where  the  job  is  finally  completed. 
Then  the  envelope  is  sent  back  to  the  office,  where  it  is 
to  be  priced  and  entered  upon  the  books. 

In  speaking  of  the  composing  room,  press  room, 
etc.,  we  have  not  in  mind  large  offices  where  there  is  a 
separate  room  or  a  separate  floor  for  these  processes 
but  use  the  terms  to  indicate  the  different  departments 
or  production  centers  of  a  printing  plant. 

The  Job  Ticket,  the  Job  Record,  and  the  Job  En- 
velope has  now  been  laid — the  foundation  of  the  Cost 
System.  The  structure  cannot  be  built  or  finished  or 
have  any  value  without  this  permanent  and  solid  basis. 

Now,  having  laid  the  foundation,  you  proceed  with 
the  superstructure ;  this  too  must  needs  be  correctly 
put  together  or  the  building  is  in  vain. 

The  Daily  Time  Ticket  is  part  of  the  material  for 
the  superstructure.  On  the  Daily  Time  Ticket  is 
entered  all  the  time  used  in  the  execution  of  all  orders. 
This  time  ticket  becomes  the  superstructure  of  the  Cost 
System.  The  time  used  in  the  different  departments, 
or  production  centers,  of  the  plant  is  a  prime  factor  and 
the  accuracy  of  the  cost  system  depends  largely  on  the 
care  used  in  keeping  the  daily  time  ticket. 


DECIMAL  UNIT  OF  TIME  15 

In  building,  the  workmen  do  not  cut  boards  to  any 
length  that  suits  their  ideas,  the  walls  are  not  one  size 
on  one  side  and  different  dimensions  on  the  other  sides, 
but  the  whole  is  built  according  to  a  well-defined  plan. 
The  rule  of  inches  and  feet  is  the  unit  of  the  building. 
A  stable  structure  is  not  possible  if  each  man  were  to 
follow  his  own  ideas  as  to  length  or  breadth.  He  must 
use  the  unit  of  measurement  and  be  guided  by  the 
specifications  of  the  master  builder.  The  man  at  the 
case  or  at  the  press  mttet  needs  use  a  definite  unit  of 
time  so  that  the  finished  product  may  be  produced  on 
the  same  unit  bases  in  all  departments,  and  correct 
figures  secured  for  use  in  the  completed  records. 

The  adoption  of  a  unit  of  time  is  an  important 
matter  in  the  work  of  keeping  daily  time  tickets.  For 
general  use,  the  unit  of  six  minutes,  this  being  one- 
tenth  of  an  hour,  greatly  simplifies  the  figuring  of  time 
on  all  tickets  and  job  records  and  all  other  time  records 
in  the  cost  system.  The  six-minute  (.1)  unit  is  the 
best,  although  the  five-minute,  the  ten-minute,  or  the 
fifteen-minute  unit  are  sometimes  used.  In  considering 
all  the  units  in  use,  and  their  applicability  to  the  work 
of  a  small  office,  the  use  of  the  six-minute  (.1)  or  tenth 
of  an  hour  unit  is  recommended. 

Using  a  six-minute  unit,  all  work  recorded  on  the 
Daily  Time  Ticket  is  either  .1  of  an  hour,  .2,  .5,  etc.,  up 
to  .9,  1  hour,  1.1,  1.2,  1.5  and  so  on.  This  makes  the 
entering  of  time,  on  the  part  of  the  workmen  and 
extension  by  the  cost  clerk,  very  simple  and  easy. 
While  to  the  non-user  of  the  Cost  System,  this  may 
seem  somewhat  awkward  at  first,  in  practical  use  it  is 
recognized  as  the  correct  way  to  record  time,  and  the 


16 


THE  PRACTICAL  COST  SYSTEM 


use  of  the  decimal  unit  greatly  simplifies  the  figuring 
of  all  tickets  and  time  reports. 

Having  adopted  a  unit  of  time,  you  can  now  easily 
follow  the  working  of  the  Daily  Time  Ticket. 


Note. — Unit  Clock  Faces.  For  the  convenience  of  the 
users  of  the  Practical  Cost  System  we  have  prepared  two  sizes 
of  clock  faces,  like  the  illustration,  showing  the  six  minutes, 
(.1)  of  an  hour,  time  unit.  The  hour  hand  points  to  the  hours, 
the  inner  circle  of  numbers,  as  usual,  while  the  minute  hand 
points  to  the  time  units,  the  outer  circle.  The  time  shown  in 
the  illustration  is  1  o'clock  and  9  units,  .9  of  the  hour.  Each 
of  the  time  unit  squares  on  the  Daily  Time  Ticket  represents 
.1  of  an  hour  and  the  workman  would  record  the  time  shown 
on  this  clock  face  by  drawing  a  pencil  mark  through  nine  of 
the  squares  in  the  column  headed  1  to  2. 

These  dials  are  printed  on  a  heavy  paper  and  can  be 
easily  pasted  on  the  face  of  a  clock.  Two  sizes  are  carried  in 
stock — 4  inch  for  the  small  bench  clocks  and  11  inch  for  the 
large  wall  clocks.  These  sell  for  50  and  75  cents  each. 


REASON  FOR  TIME  TICKETS  17 

Note. — Reason  for  Time  Tickets.  Before  going  any  fur- 
ther, we  want  to  explain  a  few  things  in  connection  with  the 
time  tickets  and  to  allay  any  misunderstandings  and  supply 
the  reason  and  necessity  for  the  Daily  Time  Ticket. 

First  and  foremost,  the  Daily  Time  Ticket  is  not  used  for 
a  check  on  your  workmen.  It  is  the  same  in  all  essentials  as 
the  sale  slips  generally  used  by  stores  throughout  the  country. 
Clerks  make  out  sale  slips  for  whatever  goods  are  bought  in  a 
store.  One  of  these  slips  goes  to  the  bookkeeper  that  he  may 
charge  the  customer  correctly  with  the  goods  bought. 

The  printer  sells  the  products  of  labor,  and  he  must 
charge  for  every  productive  minute  of  this  labor,  just  the  same 
as  a  merchant  must  charge  for  every  item  of  his  merchandise. 
The  printer  cannot  correctly  charge  his  customer  unless  he 
knows  how  much  labor  was  used,  the  same  as  a  merchant  can- 
not correctly  charge  a  customer  with  merchandise  unless  the 
sale  slip  shows  the  kind  of  goods  and  the  amount  sold. 

Would  you  deal  with  a  merchant  who  did  not  use  some 
system  of  recording  your  purchases,  item  by  item,  and  charg- 
ing you  for  them,  but  who  should,  instead,  at  the  end  of  the 
month  make  a  guess  at  what  you  had  bought  and  then  charged 
you  for  that?  Not  for  a  minute.  If  you  buy  $1.00  tea,  and 
only  one-half  pound,  you  want  to  pay  for  that  and  not  be 
charged  with  one  pound  of  50  cent  tea.  Without  careful 
records  of  time,  used  on  each  job  sold,  you  are  guessing  what 
you  should  charge.  Quit  guessing  where  certainties  can 
readily  be  secured.  No  man  objects  to  paying  a  right  price  for 
a  right  article,  and  a  right  price  must  include  the  correct 
amount  of  labor-time  used  in  its  production. 

The  argument  that  the  workman  was  slow,  that  the  cus- 
tomer does  not  get  all  he  pays  for  when  a  job  seems  to  carry 
too  much  time,  is  about  as  clear  as  trying  to  say  that  a  pound 
of  tea  is  worth  90  cents,  but  should  be  charged  at  only  60 
cents,  and  anyway  you  got  but  14  ounces.  This  argument  will 
not  stand  with  the  Daily  Time  Ticket  as  devised  for  this 
system.  The  workman  records  all  the  time  he  is  working,  either 
chargeable  or  non-chargeable,  and  if  he  worked  eight  hours  a 
day  before  the  adoption  of  the  system  and  got  out  the  work; 
and  if,  since  the  adoption  he  works  eight  hours  and  gets  out 


18  THE  PRACTICAL  COST  SYSTEM 

the  work,  where  is  the  difference?  Even  if  it  seems  to  take 
longer  to  do  the  work  than  you  thought,  do  not  blame  the 
man  or  the  system — but  blame  yourself  because  you  have  been 
guessing  wrong  during  the  past.  Do  not  guess  wrong  any 
longer,  but  record  the  facts. 

It  should  be  understood  that  a  workman  who  does  not 
record  his  time  rightly  is  in  the  same  class  as  the  clerk  who 
undercharges  or  overcharges  a  customer.  In  the  one  case  he 
cheats  his  employer  and  in  the  other  he  is  cheating  the 
customer. 

Honesty  in  recording  time,  so  that  the  employer  may 
receive  the  full  benefit  of  what  he  pays  for,  and  that  the  cus- 
tomer shall  have  charged  to  him  just  what  he  should  pay  for, 
is  the  only  correct  principle.  Unless  the  Daily  Time  Ticket 
shows  the  time  of  the  employee  in  full,  for  the  day,  an  investi- 
gation should  be  made  as  to  why  the  time  is  not  all  accounted 
for. 

The  Daily  Time  Ticket  is  the  sales  record  of  the 'system, 
and  on  its  faithful  and  honest  keeping  depends  the  uprightness 
and  prosperity  of  the  business.  If  these  time  reports  are  kept 
lira  careless,  slipshod  manner,  the  whole  cost  system  will  be 
disorganized,  the  charges  on  jobs  will  be  as  unreliable  as  the 
old  guess-work  way  —  unfair  to  both  the  seller  and  the 
customer. 

Time  is  one  of  the  most  important  elements  of  the  cost 
of  production  and  much  depends  upon  a  correct  record  of  the 
time  for  every  process  of  work. 

The  employee  should  not  get  the  idea  that  practically  all 
his  time  should  be  reported  as  on  productive  work.  That  idea 
is  wrong  and,  moreover,  such  a  condition  is  impossible.  In 
the  composing  room,  for  instance,  even  in  the  most  efficiently 
conducted  plants,  the  non-productive  time  will  range  from  25 
per  cent  to  as  high  as  40  per  cent  of  the  total  time,  and  even 
SO  per  cent  is  not  uncommon. 

The  individual  efficiency  of  the  employee  and  the  effici- 
ency of  the  management  are  both  important  factors  in 
reducing  production  costs;  and  an  even  more  important  factor 
is  the  efficiency  of  the  plant  itself.  If  the  workman  is  com- 
pelled to  waste  hours  each  week,  because  of  insufficient 


20  THE  PRACTICAL  COST  SYSTEM 

material  to  work  with,  such  waste  will  greatly  increase  pro- 
duction cost.  Under  present  conditions  of  labor  cost  and 
business  burden,  or  overhead,  every  minute  of  time  wasted 
actually  costs  the  business  an  average  of  4^2  cents,  more  than 
this  in  the  cylinder  press  room  and  less  in  the  bindery. 
Wages  paid  for  time  wasted,  either  through  lack  of  equipment 
or  for  any  other  cause,  can  never  by  any  possibility  be 
recouped  but  are  irretrievably  lost.  The  amount  so  spent 
would,  if  invested  in  more  efficient  equipment  or  in  training 
the  employees  to  greater  individual  efficiency,  and  by  that  we 
do  not  mean  to  work  harder,  bring  in  good  dividend  returns 
every  month  of  the  year. 

With  these  things  impressed  on  your  mind,  and  kept  well 
to  the  front  in  all  the  work  of  the  cost  system,  you  will  be 
ready  to  undertake  the  keeping  of  the  Daily  Time  Tickets. 


The  Daily  Time  Ticket,  as  its  name  indicates,  is  a 
report  by  the  employee  of  all  the  time  spent  by  him 
each  day  while  working  for  his  employer.  It  has  been 
devised  so  that  a  reading  will  show  exactly  what  he 
has  accomplished.  This  form  is  not  merely  "some- 
thing to  fill  out."  A  properly  designed  form  does  not 
call  for  any  useless  information,  but  it  does  call  for  all 
the  necessary  information  and  every  item  called  for  on 
this  time  ticket  is  necessary. 

As  he  is  being  paid  to  work,  you  are  entitled  to 
know  what  he  is  doing,  and  to  what  use  he  has  put  the 
time  bought.  A  clerk  in  a  store  records  his  sales,  and 
an  employee,  who  is  the  primary  recorder  of  the  sale 
of  his  time  and  labor,  is  in  the  same  position  as  the 
clerk  and  should  accurately  record  the  sale  of  his  time 
and  to  whom  sold.  If  you  meet  with  any  objections  to 
the  keeping  of  a  Time  Ticket  by  an  employee — a  care- 
ful explanation  of  what  this  means  to  you  and  an 
insistence  that  it  be  done  rightly  will  soon  end  all 


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Number  5. 


22  THE  PRACTICAL  COST  SYSTEM 

argument.  Because  he  has  never  done  it  before  is  no 
reason  why  it  should  not  be  done  now,  and  an  employee 
is  honest  with  himself,  his  employer,  and  the  customer 
if  he  keeps  his  time  report  correctly. 

A  Daily  Time  Ticket  is  used  each  day  by  each 
employee,  his  name,  the  date,  the  time  he  commenced 
work  and  time  he  stopped  is  recorded  on  the  top  line. 

If,  in  case  of  a  small  office,  fires  have  to  be  built  or 
sweeping  and  cleaning  done,  this  is  recorded  and 
charged  to  Office  Time,  using  No.  456  for  kind  of  work 
done.  When  actual  productive  or  chargeable  work  is 
begun,  the  number  of  the  job  worked  on  is  recorded, 
and  also  the  name  or  initials  of  the  customer,  so  that  in 
case  an  error  in  recording  the  number  of  the  job  is 
made,  it  can  still  be  identified.  The  time  work  began 
and  time  ended  must  be  indicated  for  each  job.  Idle 
time,  which  is  sure  to  occur,  must  be  accounted  for  in 
all  cases,  showing  why  idle. 

The  "Press  Work"  or  "No.  Impressions"  column  is 
hot  used  in  typesetting,  except  in  the  case  of  a  type- 
setting machine  when  ems  or  galleys  of  type  set  may  be 
recorded  in  this  column.  In  all  cases  the  column  "Kind 
of  Work"  is  filled  in,  and  the  beginning  and  ending 
time. 

On  the  improved  form  of  the  Time  Ticket,  which 
we  recommend  for  the  Cost  System,  cuts  numbers  4, 
5  and  6,  each  hour  from  8:00  a.  m.  to  6:00  p.  m.  is  in  a 
column  separated  from  the  others  by  a  double  line ;  and 
each  square  in  this  hour  column  represents  the  .1  of  an 
hour,  or  six  minutes,  time-unit. 

After  the  workman  has  filled  in  the  spaces  for  the 
job  number,  name  of  the  customer  and  the  kind  of 


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Number  6. 


24  THE  PRACTICAL  COST  SYSTEM 

work  he  has  only  to  draw  a  pencil  line  across  the 
squares  from  the  time  of  starting  the  job  to  the  time 
of  finishing.  For  example,  if  he  starts  in  at  8 :00  on  a 
general  clean-up  of  rule,  leads,  type,  etc.,  the  work  will 
be  classed  as  distribution,  with  the  work  No.  55.  If  he 
works  at  this  until  8 :45  he  will  draw  a  pencil  line  from 
the  beginning  of  the  hour  to,  and  including,  the  time- 
unit  space  numbered  48,  as  if  the  work  lasts  beyond  the 
42-minute  space  it  must  be  considered  as  filling  the  full 
space  following.  In  other  words,  do  not  split  a  unit 
of  time,  for  the  three  minutes  which  might  be  added  to 
some  jobs  will  not  have  any  appreciable  effect  on  the 
cost  of  the  job  and  will  equalize  itself  in  the  course  of 
the  day.  When  he  completes  the  next  job  he  will  draw 
a  pencil  line,  in  the  space  following  the  record  of  the 
job  number  and  the  work  number,  starting  with  the  54- 
minute  space  and  stopping,  as  before,  with  the  unit 
space  of  the  finishing  time.  See  illustration  of  Time 
Ticket,  cuts  numbers  4,  5  and  6.  The  right  hand  por- 
tion of  the  Time  Ticket,  beyond  the  triple  line,  is  for 
office  use  only  except  that  the  column  headed  "Press 
Work,"  "No.  Impressions"  may  be  filled  in  by  the  em- 
ployee, if  desired,  as  mentioned  above. 

A  further  advantage  of  the  use  of  the  improved  time 
report  used  in  the  Practical  Cost  System  is  that  if  the 
workman  has  to  stop  on  a  job  before  completing  it  to 
do  some  other  work  he  will  draw  the  pencil  line 
through  the  time  squares  to  the  point  where  he  is  in- 
terrupted, do  the  other  work,  and  when  he  returns  to 
the  job  in  hand  he  will  not  need  to  re-enter  the  job 
number  and  kind  of  work  a  second  time  but  will  record 
the  time  of  resuming  work  to  the  time  of  finishing.  See 


WORK  NUMBERS  EXPLAINED  25 

illustration  of  Time  Ticket,  cut  number  4,  second  line 
in  the  afternoon  section. 

On  the  back  of  the  Daily  Time  Ticket,  is  printed  a 
list  of  the  operations  most  common  in  a  printing  office, 
and  these  will  now  be  taken  up  one  at  a  time  and 
explained. 
COMPOSITION— 

1.  Hand  Composition. 

2.  Hand  Alterations. 

21.  Advertising,  Hand  Work. 

3.  Make-up. 

4.  Lock-up. 

5.  Machine  Composition. 

6.  Machine  Alterations. 

31.  Machine  Composition,  Advertising. 
(Non-chargeable) 

51.  Pulling  Proofs. 

52.  Reading  Proof. 

53.  Hand  Set  Corrections. 

54.  Machine  Corrections. 

55.  Distribution. 

56.  Cleaning  Machine. 

PRESS  WORK— 

101.  Make  Ready. 

102.  Holding  Press  for  Proof. 

103.  Running. 
(Non-chargeable) 

151.  Changes  (Press  Corrections). 

152.  Washup. 

STOCK  ROOM— 

201.  Cutting  Stock. 

202.  Handling  Stock. 
(Non-chargeable) 

251.  Unpacking  and  Shelving  Stock. 

252.  Changing  or  Edging  Knife. 


26  THE  PRACTICAL  COST  SYSTEM 

BINDERY  WORK— 

301.  Tabbing. 

302.  Trimming. 

303.  Folding  and  Inserting. 

304.  Gathering. 

305.  Perforating  and  Punching. 

306.  Stitching  or  Stapling. 

307.  Binding. 

308.  Numbering. 

309.  Counting. 

310.  Mailing. 
(Non-chargeable) 

351.  Clean-up. 
OFFICE  WORK— (Non-chargeable) 

451.  Bookkeeping. 

452.  Soliciting. 

453.  Collecting. 

454.  Delivering. 

455.  General  Office  Work. 

456.  Janitor  Work. 

Note — All   work   numbers   containing   any   50's   are  non- 
chargeable. 

OFFICE  WORK 


Office  Work  is  an  original  idea  with  the  Practical 
Cost  System  and  came  about  because  in  the  first  at- 
tempts at  a  simple  system,  the  office  part  was  neg- 
lected, but  in  a  few  weeks  came  a  host  of  inquiries  as 
to  charging  different  kinds  of  time  used  in  the  office, 
where  the  proprietor  does  work  in  the  printing  depart- 
ments, and  where  to  charge  general  cleaning  up,  and 
other  things.  Then  the  "Office  Work"  column  was 
added  and  the  troubles  on  that  score  ended. 

Under  Office  Work  we  have  No.  451,  bookkeeping; 
No.  452,  soliciting;  No.  453,  collecting;  No.  454,  deliver- 


OFFICE  WORK  EXPLAINED  27 

ing;  No.  455,  general  office  work,  and  No.  456,  janitor 
work.  Nos.  451,  452,  453,  are  not  used  or  especially 
needed  as  separate  time  unless  the  proprietor  so  de- 
sires. No.  455  covers  nearly  all  the  needs,  but  the 
others  are  added  to  designate  such  things  as  generally 
come  under  the  heading  of  Office  Work.  No.  456  is 
for  janitor  work,  and  is  chargeable  to  the  office  as  it 
would  be  practically  impossible  to  divide  this  time 
against  each  separate  department,  and  in  any  case  a 
general  cleaning  up  is  a  general  expense  of  the  busi- 
ness. Someone  in  the  plant  does  this  work,  and  the 
time  should  be  accounted  for. 

Where  the  proprietor  or  manager  of  a  plant  works 
in  the  printing  department,  he  will  make  out  a  time 
ticket  each  day,  so  that  his  time  can  be  accurately 
divided  against  the  departments  where  the  work  has 
been  done.  It  is  plainly  as  important  that  all  his  work 
should  be  charged  for  as  that  of  the  workpeople.  If  the 
proprietor  makes  up  the  paper,  sets  a  job,  does  the 
mailing  of  the  paper,  that  time  should  be  accounted 
for,  and  he  will,  therefore,  as  well  as  his  employees, 
make  out  a  Daily  Time  Ticket.  Unless  he  does  this  his 
shop  labor  will  not  appear  on  the  records  and  the 
number  of  labor-hours  recorded  will  be  less  with  a 
consequent  increase  in  the  hour  costs. 

Delivering,  No.  454 :  The  work  number  for  this  is 
in  the  series  covering  office  work  for  the  reason  that  in 
the  small  plants  the  proprietor  often  likes  to  deliver  the 
work  so  as  to  show  the  customer  the  excellencies  of  the 
job,  or  his  promptness,  or  as  an  opportunity  to  solicit 
more  work.  In  the  larger  plants,  where  they  have 
work  for  an  errand  boy,  the  delivery  is  sometimes  con- 


28  THE  PRACTICAL  COST  SYSTEM 

sidered  a  part  of  the  stock  work  and  is  further  treated 
under  that  heading. 

We  believe,  however,  that  the  delivery  should 
always  be  considered  as  a  part  of  the  office  work  for 
the  reason  that  the  operation  is  a  delivery  of  the 
product  of  all  the  departments  which  have  done  work 
on  the  job,  and  not  of  the  stock  room  alone.  Treating 
it  as  an  office  charge  the  cost  of  deliveries  will  be 
distributed  against  all  departments  in  proportion. 

STOCK  WORK 


On  this  Stock  Work  there  may  be  some  difference 
of  opinion,  but  from  practical  experience — not  theory — 
a  stock  handling  charge  or  a  cutting  charge — essen- 
tially the  same — must  be  made  on  each  and  every  job; 
both  a  stock  handling  and  cutting  charge  should  not  be 
made. 

Cutting  Stock,  No.  201 :  No  one  will  deny  that  it 
takes  time  to  cut  stock,  and  that  the  time  should  be 
recorded  and  charged  for.  It  costs  money  for  the  labor, 
rent  is  paid  for  stock  and  cutter  space,  there  is  depreci- 
ation and  interest  on  the  cutting  machine  and  cost  of 
shelving.  There  is  no  argument  against  a  charge  for 
cutting  stock,  any  more  than  against  a  charge  of  time 
for  setting  the  type ;  yet  very  few,  before  the  advent  of 
cost  systems,  ever  thought  of  doing  such  a  thing  as 
charging  for  cutting  stock.  Since  this  advent  a  few, 
possibly  not  wishing  to  admit  they  have  been  so  mis- 
taken in  the  past,  argue  against  such  a  charge  and  put 
the  whole  stock  room  work  into  Office  Expense.  That 
is  ridiculous!  There  is  no  more  reason  for  doing  it, 


STOCK  HANDLING  CHARGE  29 

than  for  putting  press  work  or  tabbing  into  office  ex- 
pense. Remember  this  :  everything  that  goes  into  a  job 
of  any  kind  must  be  charged  for.  Any  other  theory  of 
running  a  cost  system  is  false,  and  fails  in  its  purpose, 
which  is,  the  finding  of  the  correct  cost  basis,  through 
correct  hour  costs,  on  which  to  build  a  fair  and  equit- 
able selling  price  of  the  individual  job  of  printing. 

Handling  Stock,  No.  202:  All  that  has  been  said 
about  cutting  stock  is  true  for  handling  stock,  but  per- 
haps it  needs  a  little  more  explaining.  The  idea  of  charg- 
ing one  or  more  units  of  time  for  taking  down  500 
envelopes  and  putting  them  on  the  press  may  seem 
absurd.  Is  it?  That  stock  occupies  room,  you  have  to 
pay  interest  on  the  investment  in  the  merchandise  and 
equipment,  insurance,  taxes,  rent,  and  the  price  of 
shelving  to  hold  it.  In  the  city  shops  the  errand  boy 
very  often  has  to  go  to  the  wholesale  house  for  the 
stock.  All  this  expense  must  come  out  of  the  profits — 
if  there  are  any — and  so  it  should  be  charged  and  paid 
for.  These  matters  have  been  neglected  for  years,  and 
have  caused  big  leaks  in  the  printing  business. 

A  record  must  be  made  by  the  person  who  takes  out 
the  stock,  so  that  it  will  appear  in  the  final  record  of 
the  job,  showing  who  took  out  the  stock,  the  units  of 
time  required,  and  that  the  proper  stock  and  the  correct 
amount  was  used.  This  is  as  important  as  to  know 
who  set  the  type  on  the  job.  Two  other  charges  are 
made  for  stock  work — Delivering  and  Unpacking. 


Note. — In  our  opinion,  one  of  the  principal  causes  for 
failure  to  make  money  in  the  printing  business  is  because  so 
few  have  realized  that  it  costs  money  to  handle  stock,  and  to 
attend  to  a  hundred  other  trifles.  Good  old  Ben  truly  said: 


30  THE  PRACTICAL  COST  SYSTEM 

"Many  mickles  make  a  muckle,  or  one  hundred  cents  make  a 
dollar."  In  talking  with  a  prominent  wholesale  paper  dealer, 
recently,  he  stated  that  it  cost  him  nearly  fifty  per  cent  to 
handle  broken  ream  lots,  and  that  he  is  charging  only  twenty- 
five  per  cent,  and  the  rest  comes  out  of  the  profits.  He  said 
it  was  unfair  to  the  paper  house  to  only  charge  twenty-five 
per  cent  on  twenty-five  sheets,  as  it  took  nearly  the  same  time 
and  cost  nearly  as  much  as  to  count  out  a  larger  quantity,  and 
he  contended  that  it  would  be  much  better  to  make  a  time 
charge,  but  that  it  was  practically  impossible  to  do  this,  so  he 
must  continue  to  charge  on  a  percentage  basis,  though  he 
believed  it  wrong.  Some  who  use  a  Cost  System  charge  a 
percentage  on  the  cost  of  stock  for  handling,  and  by  so  doing 
they  charge  more  for  handling  expensive  paper  than  the 
cheaper.  Is  this  right?  Would  it  not  be  as  correct  to  charge 
for  typesetting  on  a  percentage  of  the  cost  of  stock? 

It  has,  however,  become  a  custom  of  the  trade  to  charge 
ten  per  cent  on  the  cost  of  the  stock  for  handling  in  the  plant, 
and  when  the  plant  is  located  some  distance  from  the  paper 
house,  another  ten  per  cent  for  freight  and  drayage  into  the 
plant.  The  principle  is  wholly  wrong  as  it  penalizes  the  user 
of  the  better  grades  of  stock.  The  charge  should  properly  be 
for  the  units  of  time  used  in  handling  the  stock  while  the 
freight  and  drayage  cost  should  be  added  to  the  cost  of  stock 
in  the  shipment  on  the  basis  of  weight. 

The  percentage  basis  in  a  cost  system  at  any  point  is 
absolutely  wrong.  The  printer  is  selling  labor,  or  its  products, 
on  the  basis  of  the  time  used,  therefore  it  is  that  all  labor, 
going  into  the  product  should  be  sold  at  a  rate  that  will  be 
profitable.  Any  percentage  based  on  the  cost  of  the  paper, 
any  percentage  used  for  ascertaining  costs  for  a  correct  price 
for  the  products  of  labor,  is  radically  wrong.  Customs  and 
habits  are  hard  to  change  and  the  user  of  a  cost  system  must 
decide  for  himself  whether  he  will  handle  this  matter  in  the 
correct  way  or  follow  the  custom  of  the  trade. 

This  may  seem  like  a  long  argument,  but  at  this  point  it 
is  really  necessary,  as  the  very  first  thing  done  on  a  job,  or 
which  should  be  done,  is  the  stock  work,  as  that  is  where  the 
labor  commences. 


DELIVERY  NON-CHARGEABLE  31 

Delivery,  No.  454:  This  is  a  non-chargeable  item, 
as  a  direct  charge  cannot  be  made  against  the  customer 
for  the  reason  that  several  jobs  may  be  delivered  at  the 
same  time.  This  being  non-chargeable  is  an  additional 
argument  for  making  a  stock  handling  charge.  The 
charge  for  cutting  stock  when  cut,  and  for  handling 
stock  from  off  the  shelves,  when  in  packages  or  boxes, 
in  the  larger  plants  includes  the  cost  of  delivering,  and 
the  cost  of  the  time  of  the  boy  or  man  used  in  this 
work  is  directly  charged  to  that  department.  See,  also, 
under  "Office  Work."  All  labor-time  must  be  reported 
on  the  Daily  Time  Ticket;  hence  the  employee  should 
keep  as  accurate  a  record  of  delivery  time  as  of  other 
work. 

The  proper  time  to  charge  for  stock  handling  is 
when  the  stock  is  first  taken  from  the  shelves  and  the 
delivery  cost  is  covered  in  that  charge  unless  it  is 
handled  as  an  office  charge  as  mentioned  under  "Office 
Work." 

Unpacking  and  Shelving  Paper,  No.  251:  It  takes 
time  to  unpack  a  shipment  of  paper,  check  the  invoices 
and  put  the  stock  on  the  shelves ;  and  as  it  may  be  used 
for  several  jobs,  it  is  non-chargeable. 

It  is  customary,  in  many  plants,  to  make  no  dis- 
tinction between  the  stock  handling  and  the  cutting, 
but  to  treat  them  as  belonging  in  the  same  department 
and  using  the  same  work  number  for  both.  For  many 
reasons,  especially  in  the  smaller  plants,  this  method  is 
advantageous  as  the  time  units  are  small  for  the  hand- 
ling. The  only  objection  to  this  method  is  that  it  has 
a  tendency  to  make  the  handling  charge  a  little  greater, 
because  of  the  increment  of  interest  and  depreciation 


32  THE  PRACTICAL  COST  SYSTEM 

on  the  cutting  machinery,  but  it  will  also  tend  to  make 
the  cutting  charges  a  little  less.  Neither  the  increase  in 
handling  nor  the  decrease  in  cutting  cost  will  make  any 
material  difference  in  the  cost  of  the  completed  job. 

To  Summarize:  Every  job  must  have  either  a  stock 
cutting  or  stock  handling  charge,  but  not  both.  Time 
used  in  delivering  and  unpacking  paper  or  shipments 
of  paper  is  stock  work  but  the  time  is  non-chargeable 
against  the  department.  We  advise,  however,  that  all 
delivering  be  treated  as  office  work.  We  now  come  to 
that  much-abused  department,  Composition. 

COMPOSING  ROOM 


This  department  of  the  printing  business  has  long 
been  called  the  "sink  hole"  of  the  printing  office,  and 
many  and  long  have  been  the  articles  published  as  to 
how  to  make  it  pay.  The  much-abused  "sorts  questions" 
"plenty  of  material,"  "new  inventions,"  "quick  meth- 
ods," have  all  been  written  and  talked  about  till  every- 
one knows  them  by  heart — but  the  one  thing  forgotten 
has  been :  "Have  you  charged  the  right  price  for  the 
composition?"  "Do  you  know  how  long  it  actually  took 
to  set  the  job?"  The  question  is  not  what  time  you 
thought  it  would  take  or  what  time  you  guessed  it  did 
take.  Poor,  dear,  old  composing  room ! 

A  swift(?)  would  look  over  a  piece  of  manuscript 
for  thirty  minutes,  figure  it  all  out,  then  rush  up  the 
job  in  fifteen  minutes,  and  tell  the  boss  he  set  the  job 
in  fifteen  minutes,  and  he  was  believed.  Everybody 
forgot  about  that  thirty  minutes  of  sizing  up  which 
should  have  been  included  in  the  composition  time,  as 


COMPOSITION  TIME  DEFINED  33 

such  sizing  is  a  necessary  part  of  the  work.  No  wonder 
the  composing  room  was  a  sink  hole. 

With  a  cost  system — The  Cost  System — the  correct 
time  must  be  given  and  the  compositor  must  account  for 
his  entire  time,  what  he  is  doing  all  day.  It  will  be 
found  that  many  of  the  jobs  which  were  formerly 
reported  as  set  in  fifteen  minutes,  now  take  forty-five 
minutes.  Remember  that  every  unit  of  time,  from  the 
unit  when  the  compositor  receives  the  copy  until  the 
job  is  on  the  galley  ready  for  pulling  proof,  must  be 
recorded  as  Composition  or  No.  1. 

What  is  the  good  of  "sorts,"  "lots  of  leads  and  slugs 
and  quads/'  and  all  the  rest,  if  the  time  required  to  do 
a  job  is  simply  guessed  at  one-third  the  time  it  actually 
takes?  That  is  about  the  percentage  of  guesswork. 
With  the  correct  reporting  of  time  used  on  the  Daily 
Time  Ticket,  you  know  the  time  used,  and  have  a  solid 
basis  on  which  you  can  charge  for  it. 

The  numbers  used  in  the  composing  department  run 
from  1  to  6  and  from  51  to  56,  so  that  the  composing 
room  numbers,  all  being  less  than  100,  can  be  readily 
recognized.  Notice  that  there  are  two  numbers,  21  and 
31,  which  are  for  composition  work  on  advertisements. 
All  these  work  numbers  will  be  explained  in  detail. 
All  work  numbers  containing  a  50  are  non-chargeable 
time. 

Composition,  No.  1:  This  includes  all  hand  type- 
setting and  is  counted  from  the  time  unit  when  the 
compositor  takes  the  copy  until  the  job  is  ready  for 
pulling  the  proof.  Where  the  composition  has  been 
done  on  a  machine  the  work  is  counted  as  hand  com- 
position from  the  time  the  compositor  takes  the  slugs 


34  THE  PRACTICAL  COST  SYSTEM 

until  the  job  is  ready  for  proofing,  even  though  it  might 
be  the  machine  operator  who  does  the  work,  it  is  hand 
composition  and  should  be  so  recorded.  If  the  com- 
position on  a  job  is  not  finished  during  the  day  only  so 
much  time  is  recorded  as  is  put  on  it  that  day  and  the 
continuance  of  the  time  on  the  job  will  appear  on  the 
time  ticket  for  the  day  when  it  is  again  taken  in  hand. 
This  time  is  chargeable. 

Hand  Alterations,  No.  2 :  All  authors'  changes  from 
the  original  copy,  resetting  of  the  job,  through  no  fault 
of  the  office,  corrections  and  changes  in  a  standing 
form  ordered  by  the  customer,  and  all  such  alterations 
and  changes,  are  chargeable  against  the  job  and  must 
be  figured  into  its  cost.  The  neglect  in  charging  such 
items  into  cost  has  been  in  the  past  a  source  of  heavy 
loss  in  the  printing  business ;  care  should  be  taken  that 
all  these  items  are  recorded  and  charged  for. 

Advertising,  No.  21 :  This  is  a  special  work  num- 
ber and  covers  all  hand  work  in  setting  advertisements. 
This  work  includes  also  the  trimming  or  cutting  of 
linotype  slugs  which  are  to  go  into  advertisements  in 
the  newspaper  and  the  necessary  whiting  out  of  such 
machine  set  lines,  and  any  work  done  on  advertising 
cuts  or  plates  to  make  them  square,  type-high  or  to 
fit  into  the  space.  This  work  number  would  be  used 
only  when  the  proprietor  desires  to  keep  the  time  on 
advertisement  composition  separate  from  other  com- 
position for  the  purpose  of  ascertaining  the  cost  of 
advertising  composition.  In  a  job  shop  and  ordinarily 
in  the  country  shop  it  will  not  be  used.  When  it  is,  the 
time  should  be  added  to  the  other  composing  room  time 
in  Record  of  Chargeable  and  Non-chargeable  Hours. 


COMPOSITION  CONTINUED  35 

Make-up,  No.  3 :  This  is  a  regular  part  of  the  com- 
posing room  time,  but  we  advise  the  keeping  of  this 
process  separate  from  composition,  as  such,  because  of 
the  additional  statistical  information  that  it  gives  the 
proprietor  on  the  division  of  the  working  time.  It  is 
especially  valuable  in  connection  with  the  issuing  of  a 
newspaper  and  of  the  work  on  large  jobs.  On  the  small 
jobs,  where  there  is  nothing  to  be  done  except  to  lift 
from  the  galley  and  lock  in  the  chase,  this  item  of  work 
may  be  omitted  and  the  entire  work,  from  the  finishing 
of  the  composition  to  the  completed  lock-up,  may  be 
included  in  the  lock-up  which  is  also  composing  room 
time. 

Lock-up,  No.  4:  This  work  is  also  composing  room 
time  and  covers  just  what  its  name  indicates:  all  the 
work  of  locking  up  to  get  the  form  ready  to  put  on  the 
press.  It  makes  no  difference  if  it  is  the  pressman  who 
locks  up  this  form,  the  time  must  be  recorded  under 
this  work  number  and  recorded  as  composing  room 
time.  When  the  pressman  does  this  work  a  proportion- 
ate amount  of  his  wage  will  be  charged  against  the 
composing  room,  as  will  be  taken  up  and  explained 
later  when  we  reach  that  portion  of  the  Cost  System. 
This  time  is  chargeable. 

Machine  Composition,  No.  5:  This  work  number 
covers  all  the  productive  composition  on  a  typesetting 
machine  of  any  class  and  the  same  rules  apply  as  in 
hand  composition. 

Machine  Alterations,  No.  6:  This  work  number 
covers  the  same  classifications  and  is  governed  by  the 
same  rules  as  are  Hand  Alterations.  The  time  used  is 
chargeable. 


36  THE  PRACTICAL  COST  SYSTEM 

Machine  Composition,  Advertising,  No.  31 :  This 
work  is,  for  the  machine,  the  same  as  No.  21  is  for  hand 
composition  and  is  governed  by  the  same  rules. 

Pulling  Proofs,  No.  51 :  This  item  of  work  is  classed 
as  non-chargeable  time  and  should  be  so  treated  and 
recorded.  The  reason  for  this  is  that  as  a  general 
thing  several  jobs  are  proofed  at  the  same  time  and  it 
would  be  a  difficult  matter  to  so  separate  the  time  that 
each  job  could  be  properly  charged.  In  addition  to  this 
the  pulling  of  proofs  is  work  done  much  more  for  the 
protection  of  the  office  against  errors  than  for  the 
benefit  of  the  customer.  For  these  and  other  reasons 
the  time  of  pulling  proofs  is  considered  and  treated  as 
non-chargeable. 

Exceptions:  On  large  jobs,  like  books,  pamphlets, 
catalogs,  briefs,  herd  books,  fair  books,  telephone 
directories,  the  newspaper,  etc.,  which  requires  con- 
siderable time  for  pulling  proofs,  and  where  the  cus- 
tomer asks  for  proofs  and  revises,  the  time  may  be 
considered  and  treated  as  chargeable.  This  is  a  matter 
that  the  proprietor  must  decide  on  each  individual  job 
and  should  issue  his  instructions  as  to  the  proofing. 
When  this  work  is  to  be  considered  as  chargeable  time 
the  workman  should  record  it  on  the  time  record,  using 
the  same  work  number  but  prefixing  or  following  the 
number  with  a  letter  C,  as  C51  or  SIC.  This  will 
enable  the  cost  clerk  to  recognize  the  time  as  charge- 
able and  make  the  proper  charge  for  this  work  against 
the  job.  This  time,  whether  chargeable  or  non- 
chargeable,  must  be  recorded  as  part  of  the  Hand 
Composition  work,  as  all  used  hours  are  to  be  entered 
in  the  hour  record  later. 


ERRORS  NON-CHARGEABLE  37 

Reading  Proof,  No.  52:  This  work,  in  all  essen- 
tials, is  similar  to  No.  51,  preceding,  and  should  follow 
the  same  rules  as  to  recording  and  as  to  whether  it  is 
to  be  considered  as  chargeable  or  non-chargeable  time. 
This  time  should  also  be  recorded  in  hand  composition 
department.  When  treated  as  chargeable  the  work 
number  should  be  used  with  the  letter  C  as  above. 

Hand  Set  Corrections,  No.  53 :  As  this  work  is  the 
correction  of  errors  made  by  the  compositor  the  time 
required  for  them  is  non-chargeable  and  must  be  so 
recorded  as  part  of  the  time  of  this  department.  In 
every  line  the  business  itself  is  held  responsible  for  the 
correction  of  errors  and  mistakes  made  by  its  em- 
ployees and  there  is  no  reason  why  the  errors  in 
composition  should  be  made  an  exception  to  this  rule. 
Regardless  of  any  who  may  argue  to  the  contrary,  a 
printing  office  has  no  right,  moral  or  legal,  to  penalize 
a  customer  for  its  own  errors  and  mistakes  or  lack  of 
efficiency.  Under  no  circumstances,  therefore,  should 
the  correction  of  office  errors  be  charged  to  the  cus- 
tomer. 

Machine  Corrections,  No.  54:  This  work  is  the 
same  for  the  typesetting  machines  as  the  preceding 
number  is  for  the  hand  composition  and  should  be 
handled  in  the  same  way. 

Distribution,  No.  55:  This  work  number  includes 
the  time  spent  in  the  distribution  of  dead  forms,  the 
cleaning  and  putting  away  of  rules,  leads,  furniture, 
quoins  and  all  the  material  of  the  composing  room 
equipment,  and  in  addition,  all  such  work  as  cleaning  or 
wiping  up  the  stones,  blowing  out  cases  and  all  the 
miscellaneous  clean-up  work  of  the  department,  except 


38  THE  PRACTICAL  COST  SYSTEM 

such  as  may  be  classed  as  janitor  work.  This  time  is 
wholly  non-chargeable  and  must  be  so  recorded. 

Cleaning  Machine,  No.  56:  This  work  covers  the 
cleaning,  adjusting,  oiling,  etc.,  of  the  typesetting 
machine,  and  in  addition  all  work  that  may  be  done  in 
cleaning,  straightening  and  repairing  of  the  matrices, 
space-bands  and  all  the  other  appurtenances  of  the 
machine,  including  the  re-melting  and  pigging  of  metal. 

This  completes  the  work  numbers  used  for  the  com- 
posing room  and  they  will  cover  all  the  work  usually 
done  in  that  department.  In  all  plants  where  a  type- 
setting machine  is  used  this  department  is  a  double- 
header,  as  the  time  work  of  the  hand  composition  must 
be  kept  separate  from  that  of  the  machine  workers. 

Numbers  1,  2,  3,  4,  21,  51,  52,  53  and  55  belong  to 
the  hand  composition,  and  5,  6,  31,  54  and  56  to  the 
machine  composition.  Impress  it  thoroughly  on  who- 
ever does  the  figuring  on  the  time  reports  that  in 
extending  the  time  into  the  "For  Office  Use  Only" 
section  of  the  time  report  that  each  item  of  machine 
composition  time,  either  chargeable  or  non-chargeable, 
must  be  ringed.  The  reason  will  be  taken  up  later. 

PRESS  ROOM 


This  production  center  of  the  plant  follows  natur- 
ally after  the  work  of  the  composing  room.  All  the 
numbers  of  this  department  are  in  the  100's  so  that  the 
work  will  be  easily  distinguished  from  that  of  the 
composing  room. 

Make-ready,  No.  101:  This  work  number  covers 
all  the  time  used  in  putting  the  form  on  the  press, 


PRESS  EFFICIENCY  RECORD  39 

underlaying  and  overlaying  and  regulating  the  impres- 
sion, regulating  the  ink,  determining  the  margins, 
setting  the  gauge  pins  or  feed  guides  and  pulling  a 
press  proof,  special  wash-up  to  change  ink  for  a  job, 
and  also  any  other  work  necessary  to  be  done  before 
starting  the  press  on  the  "run."  It  is  often  necessary 
to  stop  the  press,  for  additional  make-ready  or  for 
making  customer's  changes,  after  the  run  has  been 
started,  which  should  also  be  recorded  under  this  work 
number.  This  time  is  chargeable  against  the  job  and 
a  careful  record  should  be  made  of  it. 


Note. — In  connection  with  this  work  we  would  suggest 
that  a  record  be  kept  of  the  output  of  each  press  to  determine 
the  efficiency  in  use  of  each.  In  order  to  do  this,  number  each 
jobber  from  1  up  and  assign  letters  to  the  cylinders  beginning 
with  A.  When  the  pressman  enters  the  work  number,  have 
him  affix  the  number  of  the  press  to  the  work  number.  Thus, 
make-ready  on  jobber  No.  1  would  appear  on  the  time  record, 
in  the  kind  of  work  column,  101-1,  or  if  on  a  cylinder,  101-A. 
The  same  plan  should  be  followed  with  the  other  work  num- 
bers in  the  press  room.  This  will  enable  the  cost  clerk  to 
determine  the  press  that  the  job  was  run  on  and  especially  as 
to  whether  it  was  run  on  jobber  or  cylinder  press.  The  cost 
clerk,  when  extending  the  time  into  the  "Office  Use"  columns, 
should  ring  the  time  when  cylinder  press  is  indicated  by  the 
work  number. 


Holding  Press  for  Proof,  No.  102:  This  work  is 
chargeable  time  where  the  customer  demands  a  press 
proof  of  his  job.  If  on  cylinder  press,  ring  the  time. 

Running,  No.  103:  The  column  for  "Number  of 
Impressions"  should  be  filled  as  well  as  time  record  kept 
on  this  work.  This  will  make  a  showing  on  the  press 
efficiency,  which  is  important  information.  Only  the 


40  THE  PRACTICAL  COST  SYSTEM 

number  of  impressions  actually  run  during  the  running 
time  marked  on  daily  time  ticket  should  be  entered, 
regardless  of  the  number  required  for  the  entire  job. 
The  additional  impressions  for  the  job  will  naturally 
appear  and  be  entered  on  the  daily  time  ticket  when 
running  is  again  resumed.  If  this  "number  of  impres- 
sions" record  is  to  be  accurately  kept  a  counter  on  the 
press  will  be  a  necessity.  Running  time  means  the 
time  the  press  is  actually  printing  on  the  job  in  hand. 
Cost  clerk  should  ring  this  time  if  run  on  cylinder 
press. 

Changes  (press  corrections),  No.  151:  This  work 
covers  the  errors  in  composition  which  were  not  caught 
when  they  should  have  been.  They  are  purely  plant 
errors  and  as  such  are  non-chargeable  time.  The  press 
changes  on  account  of  customer  are  treated  in  No.  101. 

Wash-up,  No.  152:  This  work  covers  all  the  reg- 
ular wash-ups  and  is  non-chargeable  time.  This  number 
should  also  be  used  for  all  time  spent  in  a  clean-up  of 
the  presses  and  press  room  except  such  as  would  be 
classed  as  janitor  work.  Wash-ups  for  a  change  of  ink 
for  a  job  are  treated  in  No.  101. 

General  Information :  When  two  people,  as  press- 
man and  feeder,  work  on  a  cylinder  press  at  the  same 
time  the  time  record  is  made  for  one  man  only.  The 
other  should  enter  under  "Kind  of  Work"  the  word 
"Assistant"  or  "As't"  and  should  also  enter  the  number 
of  the  press  and  number  of  job.  His  time,  in  this  case, 
is  non-chargeable  against  the  job  but  as  his  wages  for 
the  time  put  in  are  charged  against  the  department  the 
labor-cost  of  his  time  automatically  becomes  a  part  of 
the  departmental  hour  cost. 


PRESS  CLASSIFICATIONS  41 

Where  a  cylinder  press  with  attached  folder  is  used 
and  an  extra  man  is  put  on  to  feed  an  insert  his  time 
can  be  recorded  in  the  same  manner  as  that  of  the 
assistant,  mentioned  above,  or  it  can  be  recorded  as 
bindery  time  under  number  303.  Folding  is  essentially 
bindery  work  and  we  would  consider  this  method  the 
better  way  in  which  to  handle  this  work. 

Where  a  plant  has  several  different  sizes  of  cylinder 
presses  they  should  be  classed  in  sub-departments  and 
separate  time  kept  for  each  class  as  the  hour  costs  will 
be  different.  Cylinders  22x32  and  smaller  are  classed 
as  "pony ;"  from  that  size  to  and  including  32x44,  and 
in  the  case  of  a  newspaper  press,  33x48,  would  be 
classed  as  "medium,"  and  the  larger  cylinders  should 
be  in  a  class  by  themselves.  Not  more  than  two  of  these 
classes  will  usually  be  found  in  the  smaller  shops. 

It  is  also  advisable  to  do  the  same  with  the  jobbers. 
The  10x15,  or  11x17,  and  smaller  should  be  in  one  class 
and  the  12x18  and  larger  in  another.  If  you  have  an 
automatic  feeder  attached  to  one  of  the  jobbers  this 
should  be  in  a  class  by  itself  as  the  greater  investment 
makes  it  necessary.  In  making  the  time  record  on  a 
jobber  with  attached  feeder  where  the  pressman  is  also 
at  the  same  time  running  another  press  or  doing  other 
work  will  require  a  little  additional  explanation.  A 
second  time  ticket  should  be  made  out  for  the  auto- 
matic fed  press  with  the  workman's  name  and  time 
started  and  stopped,  etc.  On  this  time  report  the  job 
numbers  and  kind  of  work  for  this  press  should  be 
entered  and  also  the  output  in  the  proper  column.  The 
labor,  except  for  the  time  of  the  make-ready  will  be  very 
little  but  the  press  must  receive  the  credit  for  its  running 


42  THE  PRACTICAL  COST  SYSTEM 

hours.  On  his  regular  time  ticket  the  workman  should 
carry  the  job  and  work  numbers  for  the  jobs  being  run 
on  both  presses  on  separate  lines  of  the  time  ticket. 
On  the  line  following  the  job  number  of  the  job  being 
run  on  the  hand-fed  press  he  should  carry  his  time  as 
usual.  On  the  line  recording  the  number  of  the  job  on 
the  automatic-fed  press  he  should  enter  just  the  units 
of  his  time  which  are  used  in  attending  to  that  press, 
in  removing  the  printed  sheets  and  adding  stock  for  the 
run,  in  starting  it  again  after  an  automatic  stop,  etc. 
In  case  any  of  these  attentions  require  less  than  a  unit 
of  time  he  can  combine  two  or  more  of  them  and  record 
them  by  drawing  the  line  as  usual.  The  reason  for 
this  is  that  the  automatic-fed  press  should  be  charged 
up  with  the  proper  proportion  of  his  labor  which  makes 
a  part  of  the  hour-cost  of  that  press.  The  time  used  in 
attending  to  the  automatic  should,  of  course,  be  de- 
ducted from  the  time  of  the  hand-fed  press,  and  the  best 
way  to  handle  this  is  to  leave  breaks  or  blank  units  in 
the  line  recording  the  time  on  the  hand-fed  press  to 
correspond  with  the  time-lines  shown  for  the  auto- 
matic. The  hand-fed  press  is,  naturally,  not  producing 
when  the  workman  is  attending  to  the  automatic.  The 
same  method  should  be  used  if  the  workman  is  doing 
other  work  than  feeding  press  while  attending  the 
automatic. 

In  extending  the  time  on  the  daily  time  reports  the 
cost  clerk  should  make  a  ring  around  all  the  time  of 
the  cylinder  press  work.  This  is  necessary  in  order  to 
distinguish  between  the  cylinder  and  the  jobber  time  in 
the  records  to  be  made  later.  Some  distinguishing 
mark  should  also  be  used  for  an  automatic  feed  press. 


BINDERY  WORK  NUMBERS  43 

BINDERY  WORK 


The  Bindery  is  probably  the  least  used  department 
in  the  average  shop,  and  in  the  smaller  shops  the 
greater  portion  of  this  time  has  been  given  away  and 
no  charge  made  for  the  most  of  its  work.  While  the 
equipment  of  this  department  is  usually  small,  yet 
from  somewhere  its  interest  on  investment,  insurance, 
etc.,  as  well  as  its  labor  must  be  paid.  It  is  not  possible 
to  run  any  business  with  success  unless  every  expense 
is  provided  for  by  an  equivalent  charge  against  the 
product.  For  easy  recognition,  all  time  in  this  depart- 
ment is  carried  under  work  numbers  in  the  300's. 

Tabbing,  No.  301 :  This  work,  sometimes  called 
padding,  or  blocking,  covers  all  the  time  of  straighten- 
ing the  sheets,  cutting  the  straw-board,  preparing  and 
spreading  on  the  "goo,"  and  the  final  cutting  apart  and 
wrapping  for  delivery.  This  time  is  chargeable  and  as 
accurate  a  record  should  be  kept  of  it  as  of  any  other 
time  in  the  plant. 

Trimming,  No.  302:  In  most  shops  this  work  has 
always  been  one  of  the  lost  "Babes  in  the  Woods"  and 
has  disappeared  when  the  charge  was  made  for  the  job. 
This  work  covers  any  trimming  or  cutting  after  a  job 
is  completed  and  is  as  certainly  chargeable  as  any  other 
time  in  the  plant. 

Folding  and  Inserting,  No.  303 :  This  work  covers 
all  folding,  whether  hand  or  machine,  and  all  inserting 
work  in  a  job  of  books,  pamphlets,  etc.  Where  a  news- 
paper is  issued  it  also  covers  the  folding  on  that,  either 
hand  or  machine. 


44  THE  PRACTICAL  COST  SYSTEM 

This  department  is  really  a  double-headed  depart- 
ment. Where  the  plant  does  much  of  its  folding  by 
machine  the  machine  folding  should  be  kept  as  a 
separate  department  and  the  time  ringed  in  the  exten- 
sion columns  of  the  daily  time  ticket  and  the  other 
time  records.  Use  the  same  work  number  but  follow 
that  number  by  a  letter  "M"  to  designate  machine 
folding.  In  the  case  of  a  cylinder  press  with  an  attached 
folder,  however,  this  letter  distinction  is  not  necessary 
as  the  simpler  way  is  to  carry  the  folder  investment  as 
a  part  of  the  cylinder  press.  In  that  case  the  only  time 
record  to  be  made  would  be  the  time  of  the  feeder,  as 
an  assistant  to  the  pressman,  when  an  insert  is  being 
folded  into  the  main  sheet,  and  this  can  be  done  under 
No.  303.  See,  also,  second  paragraph  under  General 
Information  following  "Press  Room." 

Gathering,  No.  304:  This  work  covers  just  what 
the  name  indicates  and  is  chargeable  time.  In  the 
smaller  shops  there  is  so  little  of  this  work  that  it  can 
as  well  be  carried  as  part  of  the  folding  and  inserting 
time  under  that  number. 

Perforating  and  Punching,  No.  305:  This  work 
covers  the  items  mentioned  when  done  on  perforating 
or  punching  machines.  It  does  not  cover  hand  punch- 
ing nor  perforating  on  the  press.  Where  a  small  hand 
punch  is  used  the  work  is  hand  work  and  may  be  car- 
ried under  some  of  the  other  hand  work  numbers,  as 
307.  Perforating  on  a  press  where  the  perforating  is 
done  in  the  same  run  as  the  printing  there  would  be  no 
extra  time  charge  as  the  extra  time  used  in  putting  in 
the  perforator  would  be  covered  in  the  make-ready  and 
the  slower  run  on  press  where  a  perforator  is  used 


BINDERY  WORK  CONTINUED  45 

would  be  covered  by  the  additional  time  charge  on  the 
job.  When  perforating  is  done  on  a  press  in  an  extra 
run  it  should  be  treated  as  press  work  and  recorded  as 
Running  time,  No.  203. 

Stitching  or  Stapling,  No.  306:  This  work  covers 
the  use  of  stitching  or  stapling  machines  only.  Hand 
stitching  or  sewing  should  be  included  in  numbers  303 
or  304. 

Binding,  No.  307:  This  work  is  all  hand  work  in 
the  smaller  shops  and  covers  all  classes  of  binding  that 
is  likely  to  be  done  in  the  small  plant,  such  as  order 
books  with  tag-board  or  check-board  covers  as  well  as 
stiff  covers,  pamphlet  binding  where  the  cover  is  glued 
on,  check  book  binding,  receipts,  etc.  For  the  larger 
plants  the  cost  system  includes  more  detailed  forms  to 
cover  the  various  departments  of  this  work.  In  the 
smaller  shops  this  detail  is  not  necessary  nor  advisable. 

Numbering,  No.  308:  This  work  covers  hand  ma- 
chine numbering  on  checks,  receipts,  order  books, 
tickets,  etc.,  but  does  not  cover  numbering  on  press. 
That  work  is  press  room  time  and  should  be  charged  as 
an  extra  run,  if  run  that  way,  and  be  cared  for  the  same 
as  press  perforating  mentioned  above. 

Counting,  No.  309 :  This  work  covers  the  counting 
on  those  jobs  where  the  sheets  must  be  counted  into 
accurate  quantities  before  binding,  as  with  orders, 
receipts,  checks,  etc.,  where  they  are  to  be  numbered 
either  before  or  after  binding,  or  wherever  the  work 
has  to  be  counted.  This  time  is  chargeable,  and  record 
should  be  made  of  it. 

Mailing,  No.  310 :  In  the  average  printing  plant  the 
greater  part  of  this  work  will  be  on  the  newspaper. 


46  THE  PRACTICAL  COST  SYSTEM 

The  time  is  chargeable  and  should  be  accurately  re- 
corded and  charged  against  the  newspaper.  It  will  also 
include  time  used  in  mailing  out  any  jobs  that  may  be 
delivered  in  that  manner.  It  will  cover  the  time  used  in 
writing  or  running  off  the  addresses  on  the  mailing 
machine,  wrapping,  etc. 

Clean-up,  No.  351:  This  time  is  non-chargeable 
and  covers  all  time  used  in  cleaning  up  the  bindery 
department,  washing  glue  brushes,  paste  dishes,  and 
all  the  clean-up  work  except  what  would  be  better 
carried  as  janitor  work. 

General  Information:  In  the  larger  shops  the  bind- 
ery work  is  cared  for  in  four  different  departments: 
"A" — The  heavier  machines,  cutters,  ruling  machines, 
etc.,  usually  run  by  men.  "B" — Men's  hand  work,  such 
as  finishing,  forwarding,  etc.  "C" — Girls'  small  ma- 
chine work,  perforating,  punching,  stitching,  etc.  "D" 
— Girls'  hand  work  which  would  include  all  the  cheaper 
processes,  counting,  gathering,  numbering,  sewing,  etc. 

In  the  smaller  plants  we  would  advise  the  two 
department  plan  unless  there  is  a  fairly  complete  bind- 
ery in  connection.  In  the  average  small  shop  the  "A" 
and  "B"  classes  are  not  used.  "C"  should  be  made  up 
of  the  work  of  trimming,  folding — where  a  separate 
folding  machine  is  used — perforating  and  punching, 
and  stitching  or  stapling.  The  investment  would  be 
greater  in  machinery  in  this  department  and  the  hourly 
costs  higher  than  for  hand  work. 

Where  there  is  but  one  paper-cutter  in  the  plant 
assign  about  one-third  of  the  value  of  the  cutter  with 
its  interest,  depreciation,  etc.,  to  Bindery  "C"  in  the 
departmental  inventory. 


CHARGEABLE  TIME  DEFINED  47 

All  the  other  classes  of  work  would  be  carried  in 
Bindery  "D,"  regardless  as  to  whether  the  work  is  done 
by  men  or  girls.  In  the  smaller  shops  it  is  simpler  to 
combine  all  the  bindery  work  in  one  department  charg- 
ing against  it  the  value  of  all  the  bindery  machinery 
and  the  proportion  of  the  cutter  as  mentioned  above. 
This  would  make  the  hour-cost  of  the  hand  work  a 
little  more  and  the  machine  work  a  little  less,  but  not 
enough  in  either  case  to  make  any  material  change  in 
the  job  cost. 


CHARGEABLE  AND  NON-CHARGEABLE 
TIME 


We  have  accounted  for  all  the  different  processes 
liable  to  be  used  in  the  making  of  a  job  of  printing,  and 
explained  each.  Perhaps  the  words  Chargeable  and 
Non-chargeable  require  some  explanation.  The  work- 
man fills  in  no  blanks  beyond  the  triple  line  on  the  time 
ticket,  except  in  the  "No.  Impressions"  column  pre- 
viously mentioned. 

The  first  time  ticket  reproduced,  cut  number  4,  is 
one  as  handed  in  by  the  employee  at  the  end  of  the  day. 
All  the  items  under  the  heading  "These  columns  for 
office  use  only"  are  then  filled  out,  and  totaled  by  the 
cost  clerk.  Every  department  except  "Office  Time"  is 
subdivided  into  two  items,  chargeable  and  non-charge- 
able time  and  are  defined  as  follows : 

Chargeable  Time:  All  those  productive  units  of 
time  used  on  a  job  that  can  be  charged  direct  to  and 
become  a  part  of  the  cost  of  the  completed  work. 


48  THE  PRACTICAL  COST  SYSTEM 

Salable  units  of  time  as  compared  with  the  time  that 
has  no  salable  value  such  as  distribution,  office  work 
or  janitor  work. 

Non-chargeable  Time:  All  other  portions  or  units 
of  time  used  by  the  workman  in  his  daily  work,  non- 
productive time,  that  cannot  be  charged  against  a  par- 
ticular job,  or  where  he  assists  at  a  machine  whose  time 
is  already  charged  through  another  workman. 

The  only  items  that  are  generally  non-chargeable 
are,  in  the  composing  room  Nos.  51  to  56;  in  press 
room,  151  and  152;  in  stock  room,  251  and  252;  in 
bindery,  351;  and  all  the  office  work,  451  to  456,  as 
none  of  these  items  can  be  properly  charged  to  any  job. 
The  office  work  items  form  a  part  of  what  is  commonly 
spoken  of  as  "administrative  overhead"  or  "business 
burden"  while  the  other  items  are  a  part  of  the  "plant 
overhead"  or  "shop  burden."  All  the  cost  of  this  non- 
chargeable  time  as  well  as  the  overhead  or  business 
burden  expense  must  be  carried  by  the  chargeable  hour 
and  becomes  a  part  of  the  hour-cost  of  those  hours. 

Extending  Chargeable  and  Non-chargeable  Time: 
After  the  workman  hands  in  his  time  ticket  for  the 
day,  and  before  the  work  can  be  charged  to  any  par- 
ticular job,  all  items  must  be  extended  to  the  charge- 
able and  non-chargeable  columns.  All  time  in  office 
work  is  extended  to  that  column.  If  one  of  the  shop 
workmen  waits  on  customers,  answers  telephone  calls, 
or  does  any  of  the  office  work  the  time  so  used  is  to  be 
entered  on  his  time  report,  using  the  proper  office  work 
number,  which  is  generally  No.  455,  and  the  extension 
is  to  be  entered  in  the  office  column.  A  portion  of  his 
wage  will  be  charged  to  office  as  shown  later. 


RINGING  STOCK  ROOM  TIME  49 

All  work  in  the  numbers  under  99  is  extended  in 
the  composing  room  time  columns,  but  in  the  case  of 
machine  composition  a  ring  should  be  placed  around 
the  time  to  keep  it  separate  from  the  hand  work,  as  the 
two  kinds  of  work  are  in  different  sub-departments. 

All  work  in  the  100's  is  extended  as  press  room  time 
in  the  proper  columns,  but  in  case  of  cylinder  press- 
work,  a  ring  is  placed  around  the  time  for  the  same 
reason  as  above ;  in  case  of  different  sized  cylinders  or 
jobber  with  feeder  attached  the  cost  clerk  must  use 
care  that  the  items  are  kept  separate  for  use  in  other 
records.  This  will  be  easy  if  the  various  machines  are 
numbered  or  lettered.  Where  there  is  no  typesetting 
machine  or  cylinder  press  in  the  plant  the  ringing  of 
the  time  in  these  two  columns  is  not  necessary. 

All  work  in  the  200's  is  extended  to  the  proper  stock 
or  bindery  columns  but  a  ring  is  placed  around  the 
stock  room  time  for  the  same  reason  as  above. 

All  work  in  the  300's  is  extended  in  the  proper  stock 
or  bindery  columns,  without  a  ring.  All  work  numbers 
containing  a  "50"  are  non-chargeable  time. 

Now  the  time  is  posted  up  in  each  column,  but  ma- 
chine composition  time,  cylinder  press  time  of  the 
different  sizes,  the  job  press  with  attached  feeder,  and 
stock  room  time  is  kept  separate  in  the  totals  as  shown 
in  the  time  ticket  reproduced,  cut  number  5.  The  total 
time,  both  chargeable  and  non-chargeable  on  each 
workman's  time  record,  must  equal  his  entire  day's 
work. 


CHAPTER  II 


THE  JOB  RECORD 


The  Job  Record :  We  have  accomplished  the  build- 
ing of  the  structure,  but  we  must  now  go  back  and 
take  up  the  Job  Record,  the  reverse  side  of  the  fly  sheet 
attached  to  the  Job  Envelope,  which  is  the  foundation 
of  our  Cost  System,  and  to  which  the  structure  is 
firmly  attached. 

The  Job  Record  is  a  summary  of  the  time  used  on 
any  particular  job  and  is  taken  from  the  Daily  Time 
Tickets.  Even  though  the  work  on  the  job  may  take 
several  days  in  any  one  or  several  departments  yet,  as 
the  work  progresses  each  day,  the  time  is  taken  from 
the  Daily  Time  Tickets  and  is  entered  on  the  Job 
Record.  The  Job  Record  has  four  sections  that  con- 
form to  the  extension  columns  on  the  Daily  Time 
Ticket,  and  in  these  sections  the  daily  items  of  time  put 
in  on  a  job  are  collated  until  the  job  is  completed.  See 
illustration  in  cut  number  7. 

1. — Stock  Work:  Here  the  employee's  initials  or 
name,  with  date,  and  the  kind  of  work,  entered  by  the 
work  numbers,  and  the  total  time  of  that  kind  of  work 
on  the  job,  in  hours  and  units  or  tenths  is  entered. 


0$. 


JOB  RECORD 


STOCK  WORK 

PRESS  WORK 

EMPLOYE 

DATE 

KIND  OF 
WORK 

TMC 

Press 
No. 

EMPLOYE 

DATE 

K'ND  OF 
WORK 

TIMC 

M 

M 

H 

M 

fifi 

v/4/ 

ZoZ 

3 

1 

/?/? 

"/£/ 

101 

<r 

„ 

„ 

N 

/o3 

1 

-.  ___ 

COMPOSITION 

EMPLOYE 

DATE 

KIND  OF 
WORK 

TIME 

H 

M 

ft  P. 

4/V 

/ 

/ 

£ 

NOTE)  Indicate  Cylinder  Press  Work  by  •  ring 
around  the  tint* 

SUMMARY  OF  COST 

ITEMS 

TIME 

COST 

M 

M 

9 

c 

STOCK 

j 

/^ 

STOCK  WORK 

^ 

*f 

MACH.  COMP. 

NOTE)  lad  cste  Machine  Compaction  by  a  ring 
•round  the  time 

^HAND  COMP. 

f 

^ 

y 

ft? 

BINDERY 

/CYLINDER  PRESS 

CVPLOYE 

DATE 

KIND  OF 
WORK 

TIME 

JOB  PRESS 

1 

^* 

J? 

2S 

H 

M 

RP 

S/y 

3o'i 

£ 

INK 

JO 

tl 

if 

Jo* 

^ 

BINDERY 

IP 

*l 

RULING 

ELECTROS 

ENGRAVINGS 

EXTRAS 

TOTAL  COST 

i 

It 

PROFIT 

LOSS 

W 

SELLING  PRICE 

ty 

oo 

52  THE  PRACTICAL  COST  SYSTEM 

2. — Composition:  This  work  is  to  be  entered  on 
the  Job  Record  in  the  same  manner  as  above  but  care 
must  be  taken  to  put  a  ring  around  the  time  of  the 
typesetting  machine.  We  would  advise  the  entering  of 
the  hand  composition  time  in  the  upper  portion  of  this 
'  space  and  the  machine  composition  in  the  lower 
portion. 

3. — Press  Work:  In  this  the  number  of  the  press 
should  be  used  as  well  as  the  initials  of  the  workman 
and  the  date  and  kind  of  work.  Care  should  be  taken 
to  ring  the  cylinder  press  time  and  also  to  properly 
designate  the  time  of  a  jobber  with  attached  feeder 
and  the  different  classes  of  cylinders. 

4. — Bindery  Work:  If  you  are  keeping  records  of 
more  than  one  class  of  this  work  the  time  of  the  differ- 
ent classes  should  be  designated  by  using  a  ring  for 
one  class  or  by  some  other  distinguishing  mark,  as,  for 
instance,  using  a  ring  around  machine,  or  class  "C" 
work. 

As  the  job  goes  through  the  plant  to  completion, 
whether  in  one  day  or  in  several  days,  the  time  on  that 
job  is  collated  on  this  job  record.  When  the  job  is 
completed  and  the  job  envelope  is  returned  to  the 
office,  the  time  used  in  each  department  is  totaled  and 
carried  to  the  Summary  of  Cost  on  the  Job  Record  and 
entered  opposite  the  proper  items — the  total  of  the 
hours  and  units  used  in  each  process.  This  time  is  then 
multiplied  by  the  hour  cost  used  and  the  amount 
entered  in  the  column  headed  "Cost."  See  illustration 
cut  number  7. 

The  first  item  in  the  Summary  of  Cost  is  Stock. 
Get  from  the  Job  Envelope  the  details  of  the  stock  used 


INK  AND  EXTRA  JOB  ITEMS  53 

on  the  job  and  figure  the  cost  laid  down  in  your  stock 
room,  if  you  keep  your  stock  costs  that  way ;  otherwise 
use  the  cost  at  the  paper  house  plus  ten  per  cent  for 
freight  and  drayage  and  plus  another  ten  per  cent  for 
handling  into  the  house  and  onto  the  shelves  and  for 
spoilage,  and  enter  this  in  the  "Cost"  column.  See 
note  following  handling  stock  No.  202. 

Do  not  forget  the  cost  of  the  Ink  on  the  job.  This 
is  printed  large  on  the  job  record  so  that  it  will  not  be 
forgotten.  This  cost  should  be  at  least  ten  cents,  even 
for  the  smallest  run  of  cards,  for  the  wastage  in  wash- 
up  and  drying  in  the  containers  must  be  cared  for  in 
this  charge.  On  longer  runs  charge  fifteen  cents  for 
the  first  thousand  and  ten  or  twelve  cents  for  additional 
thousands.  This  will  probably  care  for  the  ink  wasted 
in  wash-up  and  also  for  what  will  dry  and  harden  in  the 
cans. 

Ruling  is  the  next  item.  Enter  here  the  cost  which 
must  also  include  transportation  and  handling  cost  of 
special  ruled  stock  that  may  be  required  for  the  job. 

Where  electrotypes  or  engravings  are  required  for 
the  job,  enter  their  cost  opposite  those  items  in  the 
summary.  Following  these  are  two  blanks  for  extras. 
Enter  here  the  cost  of  any  other  extras  for  the  job  such 
as  cords  and  pencils  for  dance  programs,  telegrams  or 
telephone  tolls  if  used  to  get  specific  instructions  or 
order  special  stock,  postage  when  job  is  mailed  to 
customer,  etc. 

If  all  the  work  up  to  this  point  has  been  carefully 
kept  track  of  and  properly  recorded  you  have  stopped 
all  those  little  leaks  which  may  have  nearly  swamped 
your  business  boat  in  the  past  and  your  plant  should 


54  THE  PRACTICAL  COST  SYSTEM 

now  show  you  a  profit.  Of  course,  it  requires  some 
exercise  of  the  backbone  to  stop  these  leaks  and  some 
nerve  to  add  a  fair  profit  to  the  job  cost  as  shown  on 
this  summary.  These  should  be  cultivated  and  devel- 
oped. 

One  advantage  of  the  Job  Record  in  the  front  office 
is  often  lost  sight  of ;  it  is  a  daily  record  of  the  progress 
of  the  job  itself  in  the  factory.  This  is  particularly  true 
of  a  job  of  more  or  less  size  and  importance.  A  refer- 
ence to  the  Job  Record  shows  its  exact  location  in  the 
plant  and  the  amount  of  time  so  far  spent  on  it.  An 
irate  customer  calls  up  the  head  of  the  firm  regarding 
the  non-delivery  of  a  certain  job.  Personally,  the  head 
of  the  firm  may  know  nothing  of  the  job,  may  not 
have  seen  it,  and  perhaps  knows  little  of  its  actual 
progress  in  the  plant.  While  talking  on  the  'phone  he 
gets  the  Job  Record  and  thus  instantly  gets  a  thorough 
grip  of  the  situation  and  knows  how  far  along  toward 
completion  the  job  has  progressed ;  he  can  then  talk 
intelligently  about  the  matter. 

You  now  have  all  the  items  of  cost,  and  by  adding 
these  up  you  get  the  cost  of  the  job,  and  it  is  only 
necessary  to  add  your  profit,  and  there  is  your  selling 
price.  Seems  easy,  doesn't  it?  But  how  do  we  know 
what  price  to  charge  per  hour.  This  is  the  question  you 
now  ask,  and  it  must  be  answered,  not  by  what  it  costs 
others  but  by  what  it  costs  you  in  your  own  shop. 

Now  comes  the  capstone  of  your  building,  or  the 
roof,  to  cover  it  all,  and  then,  finally,  the  finishing,  the 
doors  and  the  windows  that  let  the  light  into  your 
business  and  completes  the  whole  structure. 


CHAPTER  III 


THE  FINISHING  TOUCHES 


The  Finishing  Touches:  Having  completed  the 
foundation  and  superstructure,  we  are  ready  for  the 
roof  or  capstone,  and  this  consists  of  the  Record  of 
Chargeable  and  Non-chargeable  hours  for  one  month. 
This  is  a  summing  up  of  the  time,  and  is  necessary 
before  anything  can  be  done  to  ascertain  the  cost  of 
labor-hours.  This  procedure  is  very  simple. 

Record  of  Chargeable  and  Non-chargeable  Hours: 
This  record,  for  each  month,  occupies  two  pages  in  the 
Summary  Book.  Notice  that  there  is  a  line  for  each 
day  of  the  month.  Across  the  top  of  the  page  are  head- 
ings for  the  various  department  columns  and  each 
column  has  two  spaces,  one  for  the  chargeable  and  one 
for  the  non-chargeable  hours.  Illustration,  cuts  num 
bers  8  and  9. 


Note. — The  blank  heading  following  the  "Job  Press"  can 
be  used  for  a  second  classification  of  jobbers  or  cylinders.  In 
case  your  plant  has  more  cljipartments  than  this  record  will 
accommodate  we  can  furnish  you  with  larger  forms  for  this 
purpose. 


Each  day  the  daily  time  tickets  are  extended  and 
the  time  in  each  department  totaled.     The  totals  for 


Record  of  Chargeable  and  Non-Chargeable  Hours 


Machine  Comp.       Hand  Composition       Cylinder  Press  Job  P.uaa     « 


/JL 


22. 


2£ 


J 


But* 


n 


,5" 


Number  8. 


Month  of.  JL^r-/^tf 

Pat/  J?o//  Summary 

Rinlcry 

Stock  Handling 

Total  Horn* 

NAMES 

)«i!y  Time  Koport* 

Tola!  WMU'CH 
for  Month 

ChortfO. 

flt.l« 

Nan-  . 

ClmrffO'ibla 

«b!«   * 

Non- 

Chtrue.bM 

All  Departments 

InrluJ.  only  ^r^n^who^  1 

7 

•27 



^^.    /O.    fott-d^tsr^j*  (fcafil 

/ 

*)0 

oo 

' 

s 

J" 

17 

.£ 

ft^JLn^nL      (PfJ^^*^*^ 

/ 

so 

JLQ. 

/ 

_ 

-27 

— 

,? 

-2£ 

. 

tfl 

a  A 

-2 

22 



7 

/ 

— 

^7 



£ 

^7 



rf 

2-h 

A 

jf 

-2-7 

— 

Total 

3 

90 

00 

V 

a/ 

J 

Total  Hours,  all  Departments 

A*S- 

3 

j><< 

— 

Cost  per  Hour,  all  Hours 

J- 

^ 

2/* 

^ 

RECAPITULATION  j^ 

o  total  Hours,  lioth  Chargeable  mid 
n-Chargoable  for  all  Department* 

7 

/ 

5~ 

2/ 

f 

Departments 

No.   Hra. 

H()urCr 

Totii 

Labor 

Cost 

? 

^y 

_2j 

5 

Office 

1*0 

/ 

<)2 

it 

A 

Z£ 

6 

Machine  Compomtion 

.r 

,9(0 

*£ 

Hand  Composition 

354 

/ 

5$ 

K7 

3 

£ 

.?rf 

V 

Cylinder  Press 

/^T 

? 

,fV 

/ 

— 

^7 

— 

Job  Press 

/>/ 

?v 

73 

// 

22. 

f 

Bindery 

t>X 

if 

*!( 

2-7 

— 

Bindery 

-e 

JL7 

— 

-dfcc^  9Ja^,^Ai^j 

/  / 

^ 

^ 

y 

3/ 

7 

3.S 

.r 

£ 

£.<? 

v 

Tota.  i-sr^s'rs 

H£ 

J 

'C 

oo\ 

NOTE:  -The  above  ia  to  be  used  only  where  employees  who  use 
Time  Reports  work  in  nil  departments.    If  employees  work  hi  separ- 
ate departments,  without  interchanging  work,  their  salaries  should 
be  charged  direct  to  their  department.    The  salaries  of  all  others 
not  using  Time   Report*  should  be  put  on  line  "General  Office 
Sulnries     as  an  ottke  expense. 

£ 

at 

5 

'? 

,} 

^ 

2 

6M 

f 

Number  9. 


58  THE  PRACTICAL  COST  SYSTEM 

each  department  collated  from  all  the  time  tickets  for 
the  day,  are  then  added  up  and  the  total  time  in  each 
of  the  different  departments  is  then  entered  on  the  line 
numbered  for  that  day  in  the  Record  of  Chargeable  and 
Non-chargeable  hours  under  the  proper  department 
heading.  Be  sure  that  the  chargeable  and  non-charge- 
able time  is  kept  separate  and  is  entered  in  the  proper 
column.  There  is  but  one  column  for  office  time  as  this 
is  non-chargeable. 

When  all  the  time  for  the  day  has  been  properly 
entered  on  this  Record  cross-add  the  time,  both  charge- 
able and  non-chargeable,  and  enter  the  amount  in  the 
"Total  Hours"  column.  If  the  figuring  has  been  done 
correctly  this  total  will  equal  the  total  time  for  the  day, 
of  all  shop  employees,  as  shown  on  the  daily  time 
tickets.  If  it  does  not  equal  this  time  the  work  should 
be  gone  over  for  errors  until  these  two  totals  agree. 
The  date  line  on  which  Sundays  or  holidays  fall  will 
be  skipped,  unless  work  is  done  on  these  days.  At  the 
end  of  the  month,  the  entire  time  is  added  up  in  both 
chargeable  and  non-chargeable  columns.  Then  cross- 
add  the  totals  of  the  departmental  columns  which 
should  equal  the  amount  of  the  "Total  Hours"  column. 
If  it  does,  the  work  is  correct ;  if  it  does  not,  the  error 
should  be  found  and  corrected.  Cuts  numbers  8  and  9. 

Having  ascertained  the  time  consumed  in  each  de- 
partment for  a  month,  you  are  now  ready  to  finish  the 
building,  and  know  your  costs  of  production  in  your 
own  plant.  For  this  we  have  a  blank  called  Summary 
of  Cost  and  Profit  and  Loss,  and  we  will  take  this  up 
item  by  item,  and  explain  each  fully,  as  we  have  in  all 
the  rest.  Illustration,  cuts  numbers  10  and  11. 


RESULT  OF  WORK  OF  MONTH  59 


SUMMARY  OF  COST  AND  PROFIT  AND  LOSS 


The  erection  of  the  foundation  and  superstructure 
of  a  building  by  good  workmen,  is  an  easy  matter,  and 
can  be  done  without  much  trouble,  but  when  it  comes 
to  the  "finishing/'  a  different  problem  is  at  hand.  The 
finer  touches  must  be  given  in  the  finishing  and  it  is 
the  same  with  the  cost  system. 

The  keeping  of  the  Job  Register,  the  Daily  Time 
Tickets,  the  Job  Record,  and  your  Record  of  Charge- 
able and  Non-chargeable  Hours  can  be  done  very 
easily  and  by  a  clerk  or  girl  somewhat  familiar  with 
the  printing  business. 

The  Statement  of  Cost,  however,  presents  a  differ- 
ent problem,  and  needs  more  study  and  closer  appli* 
cation  and  insight  into  your  business  than  any  other 
part  of  the  cost  system. 

The  Statement  of  Cost  may  well  be  compared  to  the 
doors  and  windows  of  a  building,  through  which  one 
can  receive  light  and  enter  into  a  full  understanding  of 
the  productiveness  and  the  profitableness — or  lack  of 
it — of  the  entire  plant,  or  any  department  of  it. 

Here  are  gathered  all  the  results  of  the  month's 
work.  You  take  your  expenses,  your  pay  roll,  your 
depreciation,  interest  on  investments,  taxes  and  every 
expenditure  made  for  the  benefit  of  the  business,  and 
come  to  the  final  steps  in  determining  the  time  cost  of 
your  productive  hours;  only  salable  hours  are  pro- 
ductive hours ;  all  non-salable  hours  are  non-pro- 
ductive. The  office  work  hours,  distribution  and  clean- 


Statement  of  Cost  and  Profit  and  Loss 


DEPT    INVESTMENT 

*J0y^ 

i 

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*/O/Sr** 

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Units  of  Investment 

/-2 

I2.Z 

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2*f 

ITEMS  OF  EXPENSE 

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Mach  ne  ComP. 

Hand  Comp. 

Cylinder  Press 

Job  Press 

Department  Pay  Roll 

/ 

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Interest  on  Dep.  Investment 

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^ 

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1,5"^ 

Depreciation 

2 

<fa 

V 

0 

,ff 

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tt 

! 

'ff 

Bad  Accounts 

s 

,fo 

1 

Spoiled  Work 

? 

7.tf 

|   Office  Stationery  and  Postage 

1 

% 

M 

*  1  Advertising 

I 

,5 

W 

| 

Telephone.  Telegraph,  etc. 

/- 

ff 

C-", 

j 

Selling  Expense  and  Com. 

General  Office  Salaries 

i 

jj 

tions,  Charity,  etc. 

? 

3 

fr« 

i 

J 

Water,  Soap  Towels,  etc. 

3 

rf 

Purchase  Contracts 

/> 

?$ 

M 

scellaneous  Expense 

/> 

,T(^ 

. 

Total  Office  Expense 

z 

2 

3 

/^ 

D 

rect  Department  Expenses  as  per  Summary* 

^ 

,fi? 

,^ 

te 

?f<? 

Total  Department-Cost,  without  Office  Expense 

^ 

f 

rr 

// 

* 

5 

it 

,f, 

^^ 

Distribution  of  Office  Expense 

/ 

? 

I 

z^ 

* 

3/ 

3. 

P/X 

Total  Ost  of  Departments 

Ar 

3 

0 

3y 

$ 

0 

iVf 

^r 

;7(T 

Chargeable  Hours  of  Each  Department 

!  7iT 

IZL 

S6" 

Net  Cost  per  Chargeable  Hour 

_2.-V<5 

%<£% 

/,74 

A 

^erage  Net  Cost  for           Months 

Number  10. 


For  the  Month  of. 


\*37m 

$/?cm 

*SS#o% 

Dept.  Expense  Summary 

Direct  Department  Expense  L  no 

STATEMENT  OF  PROFIT  AND  LOSS 

\            IP 

/ 

3.ZZ 

Bindery 

Stock  Handlicg 

Total 
Disbursements 

STOCK  HANDLING 

Items 

Amount 

J 

f 

?/ 

1 

w 

fi 

9 

0 

c>n 

Knife  Grinding 

fro 

Amount  of  Job  Work  for  Month 

/ 

W; 

>  00 

^ 

/if 

t 

<tio 

,f 

0 

/?(> 

Wrapping  Taper, 
Twine,  otc. 

/ 

to 

Amount  of  Advertising  for  Month 

/ 

?  x 

f  oo 

^ 

<?<? 

Other  Expense 

so 

Amt  Rec'd  on  Subscription  for  Mo. 

9t 

I  oo 

f 

7^ 

T  ?f  .| 

2 

go 

Miscellaneous  Receipts 

,?,' 

too 

/ 

,5-3 

K 

7 

a 

?;/ 

•MACHINE  COMPOSITION 

Total  Rece  pts 

Ui 

'    00 

( 

m 

'iff 

3 

t 

ja 

Oil,  Gas'ne.  Gas 

At  shown  on  Job  Tickets 

| 

':?; 

'00 

3 

/i 

j 

'Yff 

6 

/ 

/^ 

Metal  Waste 

Gross  Profit 

; 

*lt 

Oo 

.<• 

^> 

Repairs 

Less  Total  Expense  (t) 

( 

lit 

r  r^> 

? 

^«^ 

Other  Expenses 

Ne*  Profit 

3m 

$'20 

2 

f 

M 

Total 

Net  Loss 

/ 

^ 

if 

HAND  COMPOSITION 

Statement  of  Profit  and  Loss  from  Job  Tickets 

f 

^<> 

Benzine  and  Lye 

/ 

90 

Amt  of  Profit  Shown  on  Job  Tickets 

frt 

?<r 

Proof   Pjpor  and 

frtf 

Amt  of  Losses  Shown  on  Job  tickets 

f?< 

^Q 

Other  Expenses 

? 

?f 

Net  Profit  Shown  on  Job  Tickets, 

Zi 

>fa 

2 

3 

^^J 

Total 

,f 

f-0 

Let  Losses  Shown  on  Job  Tickets 

tf 

^  S         CYLINDER  PRESSES 

Statement  of  Profit  and  Loss  on  Newspaper 

1 

/- 

w|!!  TymPan  Papfir 

fO 

Amt  of  Advertising  for  Month 

i 

'2^ 

1  oo 

f 

,fO 

Rollers  &  Repairs 

i 

00 

Amt  Rec'd  on  Sub.  for  Month 

it 

7  oo 

Oil,  Rags,  etc. 

Zfi 

Total  Receipts 

iii 

'  Ob 

Cost  of  Paper  for  ivlonth 

iz, 

'   rf 

Other  Expenses 

Net  Profit  on  Newspaper 

f 

Total 

£ 

?f 

Net  Loss  on  Newspaper 

• 

?&>s 

BINDERY  EXPENSE  SUMMARY 

JOB  PRESSES 

A                  B 

c 

Tympan  Paper 

/ 

00 

Knife  Grinding 

fo 

Z 

/o 

^XQ 

3 

<7 

(?>f 

Rollers  &  Repairs 

7 

yo 

Glue,  Paste 

*  op 

fl 

I 

19 

3( 

i/J 

4 

9 

3 

^^ 

Oil,  Rags,  etc. 

w 

Repairs 

V 

7 

/I 

f 

r3/ 

The  abo 
total  in  can- 
Profit  amfL 
in    the  spa 
marked  with 
(t) 

ve 

Gas  or  Gasoline 

ho 

f 

f 

6i 

H 

fW 

AST 

I2t 

'a 

Other  Expenses 

Other  Expenses 

I         /.</V 

.2.3? 

Total 

•^ 

fn 

Total 

?  /(> 

Number  ii. 


62  THE  PRACTICAL  COST  SYSTEM 

up  hours  are  of  no  value  to  the  customer  and   are, 
therefore,  non-salable  hours. 

The  first  important  question  in  figuring  your  costs 
is:  What  is  the  value  of  the  plant?  If  you  have  an 
accurate  inventory,  this  work  is  fairly  easy.  If  not, 
there  is  only  one  of  two  things  to  do ;  take  an  inventory 
of  your  plant,  or  make  a  fair  and  full  estimate  of  its 
value  by  departments.  Using  either  plan  the  value  of 
the  plant  should  be  fixed  on  the  present  purchase  prices 
of  the  various  items  of  the  equipment,  and  not  on  what 
was  paid  for  them  when  purchased  nor  on  an  appraised 
value  of  present  worth  which  would  be  used  for  insur- 
ance purposes.  The  reason  for  this  will  appear  later. 

The  top  line  of  the  blank  for  obtaining  your  costs  is 
headed  "Department  Investments."  By  this  is  meant, 
what  each  department  is  actually  worth  at  present 
purchase  value.  Do  not  figure  what  the  "business"  is 
worth,  but  what  the  material  of  the  equipment  in  each 
department  is  worth  at  the  purchase  cost  of  today,  not 
what  it  may  have  cost  you  when  bought.  (For  addi- 
tional data  on  valuation,  see  page  73.) 

That  you  may  have  a  fair  idea  of  what  should  be 
included  in  each  department,  we  will  enumerate  items 
under  separate  headings.  To  the  value  of  the  material 
in  each  department  should  be  added  a  fair  amount  to 
cover  the  freight  and  installation  charges  on  the  equip- 
ment, especially  so  on  all  machinery  in  the  plant.  In- 
stallation charges  include  the  cost  of  all  wiring  for 
motors,  all  belting  and  other  power  connections,  also 
where  a  cement  or  other  foundation  or  pit  has  been  put 
in  for  the  cylinders  or  other  machinery,  the  cost  of 
these  should  all  be  added  to  the  departmental  value. 


DEPARTMENTAL  INVENTORY  63 

Office:  The  amount  for  this  department  should 
include  all  office  furniture,  such  as  desks,  chairs,  tables, 
typewriters,  safes,  books,  and  other  items  for  office  use 
in  conducting  the  business. 

Machine  Composition:  Present  cost  value  of  the 
machine,  including  all  extras,  extra  magazines,  all 
matrices  and  liners,  metal  melting  pot,  motor  or  engine, 
linotype  metal,  small  tools,  cabinets,  etc.  If  a  mono- 
type, include  both  caster  and  keyboard,  compressors, 
motors  and  all  extras. 

Hand  Composition :  The  present  purchase  value  of 
all  type,  rules,  leads,  and  slugs,  wood  and  metal  furni- 
ture, cabinets,  galleys,  stands,  stones,  proof  presses, 
cuts,  chases  for  cylinder  presses,  quoins,  and  every 
item  used  in  setting  type  and  getting  forms  ready  for 
the  press  room. 

Cylinder  Press:  The  value  of  the  press,  extra  rol- 
lers, belting,  power  wiring,  motors  or  engine  and  all 
extras  of  every  nature.  If  attached  folder  is  used,  in- 
clude this  in  the  value.  If  a  detached  folder,  include 
that  in  the  bindery. 

Job  Presses:  Value  of  the  presses,  including 
motor  or  engine  wiring,  power  switches,  belting,  etc., 
all  extra  rollers,  extra  chases,  drying  racks,  stock 
table,  and  everything  pertaining  to  the  presses.  If  you 
have  one  engine  or  motor  that  runs  both  the  cylinder 
and  job  presses,  the  cost  should  be  divided  proportion- 
ately between  the  two  production  centers,  on  the  basis 
of  power  required  by  each. 

Bindery:  In  a  small  office,  this  would  only  be  run 
as  one  department  and  the  value  of  stapling  or  stitch- 
ing machines,  unattached  folder,  one-third  the  cost  of 


64  THE  PRACTICAL  COST  SYSTEM 

the  paper  cutter,  tabbing  implements,  perforator,  and 
all  other  machinery  and  tools  used  in  the  bindery.  In 
larger  shops  classify  the  equipment  according  to  the 
explanation  given  in  chapter  covering  the  bindery  work 
hours,  between  the  two  or  three  bindery  departments. 

Stock  Room :  Two-thirds  of  the  value  of  the  paper 
cutter,  the  value  of  the  shelving,  tables  and  everything 
used  to  store  and  handle  stock,  but  not  the  cost  of  the 
paper  or  other  merchandise  on  the  shelves. 

With  these  items  figured  out,  and  put  at  the  head 
of  each  column  on  line  "Department  Investment,"  you 
have  made  the  first  step  in  getting  your  own  costs  of 
production. 

Department  Pay  Roll :  The  next  item  to  figure  out 
is  the  pay  roll.  This  is  one  of  the  hardest  parts  to  figure, 
but  we  have  tried  to  make  the  proposition  as  simple 
and  easy  as  possible.  On  the  page  where  you  have 
filled  out  the  chargeable  and  non-chargeable  hours 
used  in  your  plant,  you  will  find  at  the  right  a  space 
headed,  "Summary  of  Pay  Roll."  Illustration,  cut 
number  9.  On  the  spaces  place  the  names  of  the  em- 
ployees who  have  used  daily  time  tickets  for  the  month, 
and  opposite  the  names  the  amounts  paid  them  in 
wages  for  the  month. 

Care  must  be  taken  to  use  the  full  number  of  work- 
ing days  for  the  calendar  month — not  a  period  of  four 
weeks.  The  amount  of  the  wages  should  cover  all  the 
time  for  the  month,  regardless  of  whether  the  amount 
has  been  paid  the  employee  or  is  still  to  be  paid.  In 
other  words,  this  amount  is  the  labor-cost  for  the  month 
— not  the  amount  paid  out.  Salaries  of  people  who  are 
not  using  the  daily  time  tickets,  yet  draw  pay,  will  be 


DEPARTMENTAL  LABOR  COST  65 

taken  care  of  later.  If  the  proprietor  or  manager  or  one 
of  the  office  force  uses  a  daily  time  ticket  his  salary 
covering  the  hours  on  his  time  report  must  be  included 
in  the  pay  roll. 

Add  up  the  total  pay  roll ;  then  add  up  the  total  num- 
ber of  labor-hours,  both  chargeable  and  non-chargeable, 
used  during  the  month  from  your  Record  of  Charge- 
able and  Non-chargeable  hours.  The  total  amount  of 
the  pay  roll  is  then  divided  by  the  number  of  labor- 
hours,  and  the  result  is  the  labor-cost  unit  per  hour 
in  your  own  plant. 

The  next  step  is  to  ascertain  the  labor-cost  of  each 
department.  For  this,  take  the  labor-cost  per  hour  as 
the  unit  and  then  multiply  the  total  number  of  labor- 
hours,  both  chargeable  and  non-chargeable,  of  each 
department  by  the  labor-cost  unit,  which  gives  the  cost 
of  the  labor  for  each  department.  Add  these,  and  if  they 
do  not  exactly  agree  with  the  total  pay  roll,  make  such 
slight  changes  in  the  several  departments  as  will  make 
the  two  totals  agree. 

But,  you  may  say,  I  pay  one  employee  only  $20  a 
week  and  another  $35,  why  combine  them?  The  ques- 
tion of  the  differences  between  the  individual  labor  or 
wage  costs  has  comparatively  little  effect  upon  the 
ultimate  cost  per  hour.  The  $20  a  week  man  no  doubt 
needs  and  gets  supervision  by  the  $35  a  week  man, 
and  to  get  a  correct  cost,  the  wages  of  the  two  must  be 
combined  in  the  totals,  and  you  cannot  get  labor-hour 
cost  except  in  this  manner. 

Remember  we  advocate  this  simple  way  of  ascer- 
taining the  labor  cost  in  offices  where  the  employees 
work  in  all  the  departments.  If  the  case  should  be 


66  THE  PRACTICAL  COST  SYSTEM 

that  an  employee  is  employed  on  a  typesetting  machine 
or  the  job  presses,  exclusively,  then  that  labor  cost  may 
be  charged  directly  to  that  department,  and  the  hours 
not  taken  into  consideration  in  dividing  the  labor  cost 
in  the  other  departments.  We  do  not,  however,  advise 
this  method  because  as  a  general  principle,  for  the 
smaller  shops,  the  first  method  gives  a  better  and  more 
uniform  cost,  as  general  supervision  is  practically 
always  given  by  the  higher  priced  help,  even  though 
the  actual  work  supervised  may  not  be  done  in  their 
department,  and  all  departments  should  bear  a  just 
proportion  of  the  supervision  cost. 


Note. — Many  so-called  cost  experts  have  fallen  down  on 
this  by  trying  to  make  the  distribution  of  cheaper  labor  wage 
meet  the  preconceived,  and  usually  erroneous,  ideas  of  the 
"front  office."  If  you  want  the  actual  costs,  and  not  such  as  will 
conform  to  a  preconceived  idea,  you  must  take  into  consider- 
ation some  allowance  for  supervision.  The  labor-hour  cost  is 
but  one  factor  in  your  hour  cost  of  production,  just  as  rent, 
heat,  etc.,  are  but  single  factors.  You  can  never  base  a  real 
cost  of  production  on  the  price  paid  for  labor,  as  will  be 
readily  seen  when  you  consider  all  the  other  elements  which 
enter  into  the  production  costs. 


All  the  hours  are  used  in  ascertaining  the  labor-hour 
cost,  and  that  is  one  of  the  reasons  why  both  charge- 
able and  non-chargeable  hours  have  been  so  carefully 
kept  track  of.  The  non-chargeable  time  is  a  large  factor 
in  the  labor  cost,  as  all  the  expense  of  this  time  must 
be  borne  by  the  chargeable,  or  productive  hours,  for 
these  latter  are  the  only  salable  hours. 

Rent  and  Heat:  The  next  factor  or  unit  of  cost  is 
rent  and  heat.  The  rent  is  an  easy  problem  as  it  is 


RENT  OF  OWNED  BUILDING  67 

usually  paid  by  the  month.  For  the  item  of  heat  use 
1/12  of  the  total  cost  for  the  year,  adding  the  amount 
to  the  rent  each  month.  This  amount  is  to  be  charged 
against  the  departments  in  proportion  to  the  floor 
space  occupied  by  each  department.  In  determining 
the  space  for  each  department  measure  up  the  square 
feet  of  floor  space  used  by  each  department  for  its 
operations.  Do  not  take  into  account  the  floor  space 
used  for  aisles  or  passageways,  toilet  rooms,  coat 
rooms,  stairways,  elevators,  etc.  This  space  is  for 
general  use  and  should  not  be  charged  against  any  of 
the  departments.  Omitting  this  space  will  simply  raise 
the  rental  rate  per  square  foot  of  used  space  a  trifling 
amount  and  each  department  will  automatically  assume 
its  cost  in  the  slightly  increased  charge  for  the  space 
they  use. 


Note. — If  the  building  housing  the  printing  plant  is  owned 
by  the  business  itself  or  is  listed  as  a  part  of  its  assets,  as  in 
the  case  of  a  corporation,  or  is  owned  by  the  proprietor  of 
the  business,  a  rental  for  the  space  occupied  must  be  included 
in  the  monthly  expense  to  the  same  amount  as  would  be  paid 
for  the  same  space  to  any  other  landlord.  In  the  absence  of 
any  stated  figure  the  proper  rental  charge  may  be  determined 
as  follows:  Figure  the  interest  on  the  present  sale  value  of 
the  land  and  building,  not  the  appraised  value  for  taxation 
purposes,  at  not  less  than  6  per  cent  per  annum  and  at  a 
higher  rate  if  local  conditions  warrant.  To  this  amount  add 
the  taxes  on  the  property  and  the  insurance  on  the  building, 
and  also  all  the  expense  items  which  naturally  are  carried 
against  such  property,  such  as  street  improvements,  street 
sprinkling,  sidewalk  and  sewer  taxes  and  repairs,  using  the 
average  annual  amount.  Depreciation  on  the  building  must 
be  figured  at  a  fair  and  equitable  rate.  On  brick,  stone  and 
cement  buildings  the  usual  rate  for  depreciation  is  from  2  to 


68  THE  PRACTICAL  COST  SYSTEM 

3l/2  per  cent,  and  on  frame  buildings  from  5  to  7  per  cent  per 
annum,  based  on  the  building  cost  and  the  character  of  the 
building  originally.  This  amount  is  to  be  added  to  the 
amounts  above,  the  total  divided  by  12  which  gives  the  monthly 
rental  charge  on  the  building  at  cost,  but  to  this  should  be 
added  a  fair  rental  profit,  as  the  owner  is  properly  entitled  to 
a  profit  over  and  above  the  interest  on  his  investment.  If 
the  building  is  occupied  by  others  besides  the  printing  office 
the  amount  of  the  rental  should  be  adjusted  fairly  as  between 
the  occupants. 


Light:  Enter  the  total  amount  of  the  cost  of  lights 
in  the  column  headed  "Office,"  when  it  will  be  later 
distributed  against  the  departments. 


Note. — The  old  method  of  distributing  light  expense  in 
proportion  to  the  candle-power  of  the  lamps  installed  for  use 
in  the  departments  is  palpably  wrong,  and  results  in  penal- 
izing the  less  important  production  centers  which  are  usually 
located  in  the  darker  portions  of  the  work  rooms.  Every 
production  center  is  entitled  to  sufficient  light  for  its  oper- 
ations and  if  it  is  so  located  that  it  does  not  receive  enough 
daylight  for  that  purpose  it  should  not  be  loaded  with  the 
expense  of  artificial  light  because  of  its  unfortunate  location. 
Light,  like  water  supply,  is  a  general  expense  and  should  be 
carried  into  the  general  or  office  expense  where  it  will  be 
distributed  against  the  various  production  centers  in  a  proper 
proportion. 


Power:  This  item  should  be  charged  only  against 
the  departments  using  power.  If  a  gasoline  engine  is 
used,  take  the  total  amount  of  gasoline  used  for  the 
month  and  include  all  oils,  waste,  and  other  costs  for 
running  the  engine,  and  divide  according  to  the  horse- 
power-hours. Where  the  machines  are  motor  driven 
divide  the  amount  of  the  power  bill  each  month  against 


POWER  FROM  LIGHT  WIRES  69 

the  departments  using  power  according  to  the  horse- 
power-hours. 


Note. — To  find  the  horse-power  hours  when  the  machines 
are  equipped  with  individual  motors:  Multiply  the  running 
hours  of  each  machine  for  the  month  by  the  indicated  horse- 
power of  the  motor  attached,  as  shown  by  the  number  plate 
on  motor.  This  result  will  be  the  horse-power  hours  for  that 
machine.  Repeat  the  process  for  each  machine  using  power. 


To  distribute  the  power  bill :  Total  the  horse-power- 
hours  for  all  machines.  Divide  the  amount  of  the 
power  bill  by  this  total  and  the  result  will  be  the  unit 
of  cost  of  the  horse-power-hour.  Multiply  the  horse- 
power-hours of  each  machine  by  this  unit.  The  result 
will  be  the  charge  for  power  against  that  machine. 
Total  the  accounts  for  all  machines  and  see  that  the 
total  agrees  with  the  amount  of  the  power  bill ;  if  it 
does  not,  then  add  or  subtract  a  few  cents  to  or  from 
the  amounts  for  each  machine  until  the  two  totals 
agree.  If  there  are  two  or  more  machines  in  the  same 
departmental  groups,  as  two  jobbers,  total  the  amounts 
of  the  power  cost  for  the  machines  in  that  group.  Enter 
the  power  cost  for  each  machine  or  group  of  machines 
on  the  Power  line  in  the  Statement  of  Cost  under  the 
proper  department  heading. 


Note. — In  a  plant  where  the  machines,  or  groups  of 
machines,  are  driven  from  one  or  more  large  motors  the  pro- 
cedure is  similar  to  the  above.  The  running  hours  of  each 
machine  are  to  be  multiplied  by  the  power  required  to  drive 
that  machine.  A  10x15,  or  smaller,  jobber  requires  y2  horse- 
power, larger  jobbers  %  horse-power,  a  Universal  type  jobber 
1  horse-power,  a  pony  cylinder  \y2  horse-power,  a  drum  cylin- 
der newspaper  press  2l/2  horse-power,  two-revolution  cylin 


70  THE  PRACTICAL  COST  SYSTEM 

ders  3  to  5  horse-power  according  to  size.  If  some  of  the 
machines  have  individual  motors  find  the  horse-power  hours 
of  these  and  add  them  to  the  amounts  found  for  the  other 
machines,  then  distribute  the  power  bill  as  shown  above. 

Where  the  machines  are  driven  by  a  gasoline  engine, 
find  the  amount  of  the  power  cost  as  indicated  above  and 
distribute  as  for  one  large  motor. 

Even  where  a  gasoline  engine  is  used,  the  typesetting 
machine  is  usually  driven  by  electric  power,  and  probably 
from  the  light  circuit,  in  which  case  there  would  be  no 
separate  electric  power  bill.  This  machine  should  be  charged 
with  the  power  it  uses  and  this  can  be  found  as  follows: 
Electric  light  bills  are  usually  rendered  at  a  specific  price  per 
kilowatt-hour  of  current  used.  The  motor  on  a  typesetting 
machine  is  usually  Y$  horse-power.  Fifld  the  horse-power 
hours  of  this  motor  as  above  and  multiply  these  hours  by 
.746  and  the  result  will  be  the  number  of  kilowatt-hours  con- 
sumed as  power  for  the  typesetting  machine.  It  is  only 
necessary  to  multiply  these  kilowatt-hours  by  the  price  shown 
on  the  electric  bill  to  obtain  the  amount  to  be  charged  against 
this  machine  for  power.  This  amount  should  be  deducted 
from  the  electric  bill  and  the  remainder  entered  as  light  on 
the  "Statement  of  Cost  sheet." 


Other  Cost  Items:  You  now  come  to  the  items 
which  depend  entirely  upon  the  amount  invested  in  the 
respective  departments,  viz :  Insurance  and  Taxes, 
Interest  on  Department  Investment,  and  Depreciation. 

To  make  easy  figuring,  it  is  suggested  that  you 
divide  the  investments  into  $10,  $25  or  $50  units, 
according  to  whether  you  have  a  small  or  large  plant. 
If  a  small  plant,  $1,000  or  $2,000,  use  the  $10  unit.  If 
large,  use  either  of  the  others.  After  you  have  the 
total  units,  you  can  easily  work  out  the  amounts.  The 
$1,000  plant  will  have  one  hundred  $10  units.  A  $5,000 
plant  will  have  one  hundred  $50  units,  and  so  on. 


INTEREST  ON  INVESTMENT  71 

Insurance  and  Taxes :  Use  one-twelfth  of  the  total 
amount  of  insurance  and  taxes  paid  for  the  year.  Divide 
this  amount  by  the  total  number  of  investment  units 
of  the  whole  plant  and  then  multiply  this  result  by  the 
number  of  units  in  each  department.  Total  these 
amounts  and  if  the  total  does  not  agree  with  the  first 
amount  make  such  slight  changes  in  the  various  de- 
partmental amounts  until  the  two  amounts  are  the 
same.  Then  enter  these  amounts  in  the  respective 
department  columns. 

Interest  on  Department  Investment:  You  are  en- 
titled to  a  certain  and  fixed  amount  of  interest  on  the 
capital  you  have  invested  in  your  plant,  because  if  it 
were  invested  in  any  securities  it  would  bring  you  an 
interest  return  and  the  investment  here  must  do  as 
much.  As  explained  about  department  investment,  this 
is  not  what  the  business  is  worth,  it  is  not  profit,  but  it 
is  the  interest  that  your  invested  capital  must  earn 
before  you  can  make  any  profit.  Interest  on  your  in- 
vestment must  be  figured  into  cost  of  production,  even 
if  there  is  no  profit  shown  in  the  business.  What  that 
interest  rate  should  be  is  for  you  to  decide.  Practically 
all  cost  system  users  figure  the  rate  at  seven  per  cent 
except  in  those  states  where  the  common  rate  is  more. 
It  should  never  be  less  than  six  per  cent.  Capital  in- 
vested in  a  manufacturing  business  is  not  as  secure  as 
if  invested  in  farm  mortgages  and  should,  therefore, 
carry  a  higher  interest  rate.  Ten  per  cent  would  not 
be  too  high,  under  most  conditions,  for  a  printing  plant. 
The  units  mentioned  under  insurance  and  taxes  are  to 
be  used  again.  One-twelfth  of  the  amount  of  Interest 
on  Investment  lor  the  year  is  divided  by  the  total 


72  THE  PRACTICAL  COST  SYSTEM 

departmental  units,  and  this  result  is  multiplied  by  the 
number  of  units  of  each  department  to  get  the  proper 
amount  to  be  charged  to  each.  If  the  total  of  these 
departmental  amounts  does  not  agree  with  the  total 
Interest  on  Investment,  slight  changes  should  be  made 
in  each  department,  to  make  the  totals  agree. 

Depreciation:  The  principal  reason  for  figuring 
depreciation  in  cost-finding  is  that  the  wear  and  tear 
on  your  printing  equipment  must  be  cared  for  through 
your  costs,  as  it  is  a  legitimate  expense  of  the  business. 
The  true  purpose  of  depreciation  is  to  establish  a  re- 
placement fund,  which  will  care  for  the  natural  wear 
and  tear  of  the  equipment,  and  also  provide  for  the 
destruction  of  any  portion  of  its  usefulness  through 
accident  or  breakage.  The  amount  figured  for  depreci- 
ation should  be  carried  on  your  general  ledger  as  a 
Replacement  Fund  account. 

Type,  machinery  and  other  equipment  will  wear 
out,  and  must  needs  be  replaced.  There  is  no  exact 
basis  on  which  to  figure  the  time  it  takes  for  the 
material  to  wear  out,  as  some  presses,  for  instance, 
have  been  in  use  for  twenty  years  or  more  and  are 
still  doing  good  or  fair  work.  New  inventions,  new 
styles  in  type  and  improved  materials  and  machinery 
are  coming  out  at  frequent  intervals,  causing  obsoles- 
cense of  the  old  type  and  machinery,  and  the  new  will 
be  used  to  replace  the  old  and  obsolete.  The  natural 
wear  and  tear  must  also  be  taken  care  of,  and  so  de- 
preciation becomes  a  large  factor  in  the  cost  of  pro- 
duction. In  all  modern  cost  systems  for  printing  plants 
depreciation  is  figured  at  the  rate  of  10  per  cent  per 
annum  on  all  machinery  and  equipment  except  type, 


REPLACEMENT  FUND  NEEDED  73 

and  this  is  figured  on  a  basis  of  25  per  cent  per  annum. 
Because  the  life  of  much  of  the  machinery  and  equip- 
ment of  the  printing  plant  will  in  actual  service  wear 
longer  than  the  ten  years  indicated  by  this  percentage, 
it  may  look  large,  but  in  that  amount  must  be  contained 
an  amount  for  replacement  to  provide  for  the  junking 
or  scrapping  of  machinery  or  other  material  which  will 
be  replaced  before  it  is  worn  out  by  new  and  more 
efficient  machinery  or  equipment.  It  must  also  pro- 
vide for  accidental  breakages.  It  has  now  become  the 
custom  of  the  trade  to  figure  all  depreciation  on  the 
bases  given  above. 

As  stated  in  the  paragraph  devoted  to  inventory,  all 
machinery,  type  and  equipment  should  be  carried  on 
the  books  on  the  basis  of  the  present  purchase  values — 
not  what  it  cost  you  ten  years  ago,  and  not  an  appraisal 
value — because  any  replacements  made  in  your  equip- 
ment, and  any  additions  to  the  equipment  purchased 
out  of  your  capital  stock  investment,  must  necessarily 
be  made  at  the  present  purchase  price,  not  at  the  price 
of  ten  years  ago.  If  the  older  basis  of  prices  were  used 
when  your  replacements  are  purchased  the  replacement 
fund  would  be  very  quickly  exhausted,  as  the  present 
prices  are  approximately  double  what  they  were  ten 
years  ago,  and  the  investing  of  the  entire  replacement 
fund  would  not  restore  the  equipment  of  your  plant  to 
its  original  efficiency  and  value.  For  this  reason  we 
strongly  advise  the  figuring  of  depreciation  into  your 
costs  on  the  basis  of  the  present  purchase  price  of  all 
your  machinery  and  other  equipment. 

Note. — We  would  suggest  that  the  monthly  increment  of 
the  depreciation  be  set  aside  and,  if  possible,  deposited  in  the 


74  THE  PRACTICAL  COST  SYSTEM 

bank  under  a  separate  fund  for  replacement  purposes,  so  that 
when  any  of  your  equipment  wears  out  or  needs  to  be 
replaced  you  will  have  the  cash  on  hand  to  so  replace  it. 


In  distributing  the  amount  of  the  depreciation  to 
the  various  departments  of  the  plant  use  one-twelfth 
of  the  annual  depreciation  as  outlined  above.  The 
same  process  of  figuring  is  used  as  in  the  distribution 
of  the  interest  on  department  investment,  viz:  divide 
the  total  annual  depreciation  by  twelve,  divide  that 
result  by  the  total  of  the  departmental  units,  then 
multiply  this  unit  of  distribution  by  the  number  of 
departmental  units  in  each  department.  Total  these 
results  and  if  it  does  not  agree  with  the  total  amount 
of  the  depreciation  make  a  few  minor  adjustments  in 
the  various  departments  until  these  totals  do  agree. 
Then  enter  the  proper  amounts  under  the  department 
headings  on  the  "Depreciation"  line. 

You  are  now  done  with  the  Department  Invest- 
ment ;  the  rest  of  the  factors  in  your  costs  are  items  of 
general  expense  that  become  a  direct  charge  to  the 
respective  departments,  and  must  be  different  in  every 
office  and  are  changed  as  experience  and  costs  show. 
These  factors  will  be  taken  up  and  discussed. 

OFFICE  EXPENSE 


Bad  Accounts:  The  average  business  loses  one 
per  cent  of  its  accounts  each  year.  If  you  do  $1,000 
worth  of  work  a  month,  at  least  $10  should  be  set  apart 
to  take  care  of  uncollectible  accounts  which  will  come 
up,  if  not  in  this  month  then  in  some  other,  and  must 
be  provided  for.  Bad  accounts  are  part  of  the  expense 


SPOILED  WORK  WILL  OCCUR  75 

of  doing  business  and  must  be  taken  into  account  in 
finding  the  costs.  You  cannot  run  a  business  of  any 
size  or  kind  without  losing  some  money ;  you  are  pre- 
pared for  this  loss  if  you  have  the  amount  figured  into 
your  costs. 

Another  method,  frequently  used,  of  ascertaining 
the  monthly  increment  of  bad  accounts  to  be  included 
in  production  costs  is  to  take  from  your  book  accounts 
the  actual  losses  for  a  period  of  two  to  five  years  past, 
average  these  losses  to  find  the  average  loss  per  year 
and  then  use  one-twelfth  of  this  amount  each  month. 

This  item  should  be  entered  in  the  office  column 
only. 

Spoiled  Work:  Of  course  you  spoil  a  job  once  in  a 
while  and  as  long  as  dependence  must  be  placed  on 
human  heads  and  hands  mistakes  will  be  made.  This 
expense  is  a  legitimate  part  of  production  cost  and 
must  be  provided  for.  Thus  it  becomes  a  part  of  the 
expense  of  your  business,  and  must  enter  into  your 
costs.  Sometimes  jobs  have  been  spoiled  that  you 
knew  nothing  of.  With  the  introduction  of  a  Cost 
System,  jobs  are  accounted  for,  and  when  a  job  is 
spoiled  it  has  to  be  done  over,  and  a  new  Job  Ticket 
made  out.  The  amount  is  usually  two  per  cent  of  the 
total  business,  but  records  carefully  kept  may  change 
this.  If  you  have  no  spoiled  work  this  month,  you  may 
have  some  later,  so  it  is  necessary  to  be  prepared  for  it. 
The  amount  should  be  placed  in  office  column  only. 
Spoiled  work  may  be  charged  each  month  as  made,  if 
so  desired,  and  this  is  possibly  the  better  way.  All 
these  special  items  should  be  charged  month  by  month 


76  THE  PRACTICAL  COST  SYSTEM 

and  your  experience  will  show  which  is  the  best  way  to 
handle  them  under  the  conditions  in  your  plant. 

Office  Stationery  and  Postage.  This  is  an  item  of 
expense,  hence  all  stationery,  office  and  cost  system 
forms,  etc.,  printed  should  be  figured  at  cost  prices  and 
the  amount  entered  into  the  expenses.  Postage  under 
this  heading  does  not  include  postage  paid  for  mailing 
the  newspaper;  the  latter  is  a  cost  against  the  paper 
and  not  against  the  entire  business.  The  amount  is 
entered  in  the  office  column  only. 

Advertising.  Every  well-conducted  printing  office 
does  some  advertising.  May  be  it  is  only  a  few  im- 
prints, or  blotters,  or  it  may  be  a  well-defined  campaign 
of  publicity.  However  much  or  little,  it  is  a  legitimate 
business  expense,  and  should  be  figured  into  the  cost 
of  doing  business.  If  you  advertise  your  job  printing 
in  your  newspaper,  the  paper  should  be  given  credit 
for  that,  and  the  amount  charged  to  expense.  If  you 
make  an  exhibit  of  your  productions  at  the  county  fair 
the  cost  of  making  the  exhibit,  including  the  prepara- 
tions of  the  specimens  should  be  entered  as  Advertis- 
ing. The  same  holds  true  of  a  window  display.  These 
items  should  all  be  charged  and  then  be  sure  that  you 
do  the  right  kind  of  advertising — advertising  that  will 
bring  results — for  the  amount  charged.  This  amount 
is  placed  in  the  office  column  only. 

Telephone,  Telegraph,  Etc.  This  includes  the  reg- 
ular monthly  telephone  charge,  all  long  distance  tolls, 
and  all  telegrams.  This  amount  is  placed  in  the  office 
column  only. 

Selling  Expense  and  Commissions.  This  is  probably 
but  very  little  used  in  the  average  small  shop.  It  covers 


SALARIES  OF  OFFICE  FORCE  77 

the  cost  of  salesmen  who  solicit  work  either  on  salary 
or  commission.  It  does  not  include  salaries  or  com- 
missions paid  for  selling  advertising  in  or  subscriptions 
to,  the  newspaper.  That  is  a  distinct  charge  to  the 
paper.  In  city  shops,  this  item  may  be  used  to  cover 
commissions  to  printing  brokers.  Any  allowances  or 
deductions  made  to  secure  a  settlement  of  an  account 
receivable  should  also  be  included  in  this  amount.  This 
amount  should  be  placed  in  the  office  column  only,  as 
it  is  wholly  a  general  expense. 

General  Office  Salaries.  This  is  for  salaries  of  all 
persons  in  the  office  who  do  not  make  out  daily  time 
tickets,  but  are  carried  on  the  pay  roll,  and  draw  a 
salary,  this  includes  the  proprietor  who  must  also 
draw  a  salary  just  the  same  as  any  other  employee 
of  the  business.  If  you  are  a  proprietor  of  a  shop  and 
have  no  fixed  salary,  the  first  thing  you  should  do  is 
to  decide  on  the  salary,  and  then  get  it — just  the  same 
as  your  employees.  It  is  a  mighty  poor  business  that 
will  not  pay  a  salary  to  at  least  one  "Boss."  If  you  are 
just  drawing  enough  out  of  your  business  to  live  on 
you  cannot  count  that  as  a  salary  and  it  certainly  is 
not  a  profit.  A  mere-existence  style  of  living  is  a  poor 
advertisement  of  the  prosperity  of  your  business.  You 
are  entitled  to  wages  the  same  as  your  employees  but 
at  a  considerably  higher  rate  because  of  the  greater 
responsibility,  and  in  addition  to  that  a  legitimate 
profit  over  and  above  all  salaries  and  expenses,  as 
compensation  for  all  your  worry  and  trouble,  to  say 
nothing  of  what  you  have  invested  in  the  business  and 
from  this  you  are  fully  entitled  to  receive  a  reasonable 
interest  return.  Put  yourself  on  the  pay  roll  for  a 


78  THE  PRACTICAL  COST  SYSTEM 

salary — and  draw  it.  Then  if  there  are  any  profits 
left — you  are  making  money,  but  not  otherwise.  This 
amount  should  be  placed  in  the  office  column  only. 

Organization  Dues,  Donations,  Etc.  You  say,  per- 
haps, that  you  cannot  afford  to  belong  to  a  printers' 
organization.  You  can  if  you  use  a  cost  system,  as 
this  item  is  figured  into  the  costs.  Organizations  are 
necessary  for  mutual  protection  and  benefit  of  the 
members  of  the  craft  and  their  interests  and  the  ex- 
pense is  a  part  of  the  cost  of  properly  carrying  on  your 
business.  Donations  may  be  only  a  little  yet  printers 
often  give  more  liberally  than  they  should.  All  dona- 
tions made  for  business  reasons  are  an  expense  and 
should  enter  into  your  costs.  If  you  do  a  job  for 
nothing  for  church  or  lodge  (which  you  should  not  do) 
the  amount  of  the  job  at  full  price,  should  appear  in 
this  item.  In  this  item  should  also  be  included  sub- 
scriptions to  the  trade  papers  and  all  technical  expenses 
of  like  nature.  The  amount  is  entered  in  the  office 
column  only. 

Water,  Soap,  Towels,  Etc.  The  dear  old  office 
towel  would  be  renewed  oftener,  and  might  occasion- 
ally visit  the  laundry,  if  you  could  afford  it.  These 
three  items  are  a  necessity,  though  often  considered 
a  luxury,  and  are  an  item  of  expense  that  enter  into 
your  costs.  The  amount  should  be  entered  in  the  office 
column  only. 

Interest  on  Borrowed  Money  or  Purchase  Contracts. 
In  discussing  this  item  some  time  ago,  a  printer  said 
this  should  come  out  of  the  profits.  We  don't  see 
why.  It  is  part  of  the  expense  of  the  plant.  It  is 
necessary  in  a  great  many  instances  to  borrow  money 


TREATMENT  OTHER  EXPENSE  79 

to  start  in  business  and  interest  is  demanded  on  de- 
ferred payments  when  machinery  is  bought  on  the 
installment  plan.  That  is  a  part  of  the  expense  of  doing 
business  and  should  be  figured  in  the  costs.  If  your 
business  has  expanded  beyond  what  your  own  capital 
will  carry  and  it  is  necessary  to  borrow  money  to  keep 
the  business  running  smoothly,  interest  on  such  bor- 
rowed money  becomes  a  proper  charge  against  cost 
and  should  be  included.  Such  money  becomes,  in  fact, 
a  part  of  the  invested  capital  and  as  such  is  entitled 
to  an  interest  return.  There  are  so  many  chances  of 
not  making  a  profit,  that  every  legitimate  item  of 
expense  should  be  considered  and  included.  If,  by  good 
luck,  the  printing  business  shall  ever  get  to  the  point 
where  the  printer  can  make  a  certain  and  sure  profit 
on  every  job,  and  get  out  of  debt,  this  item  need  not 
worry  him;  but  until  that  blessed  day,  it  should  be 
an  item  of  cost.  The  amount  is  placed  in  the  office 
column  only. 

Miscellaneous  Expense.  Under  this  head  may  come 
any  additional  expense  that  has  not  been  enumerated 
above.  You  may  have  some  unusual  expense  that 
comes  up  and  should  be  taken  care  of.  The  amount 
should  be  charged  to  the  department  which  receives 
the  benefit,  or  if  it  is  for  the  benefit  of  the  business 
as  a  whole  it  should  be  entered  in  the  office  column. 
You  now  have  all  your  office  expense,  which  is  totaled 
at  the  bottom  of  the  office  column,  on  the  line  entitled 
"Total  Office  Expense." 


80  THE  PRACTICAL  COST  SYSTEM 


DIRECT  DEPARTMENT  EXPENSE 


A  special  summary  has  been  placed  on  the  blank 
that  the  many  small  direct  expenses  in  each  of  the 
departments  may  be  taken  care  of  and  then  brought 
forward  to  the  line  of  direct  department  expenses. 
Illustration,  cut  number  11.  These  can  be  gathered 
from  your  cash-book  expense  and  the  monthly  bills. 
These  items  should  be  entered  for  the  month  in  which 
they  were  incurred,  even  though  they  may  not  have 
been  paid  in  that  month.  They  are  a  part  of  the  cost 
of  doing  business  for  the  month. 

In  the  Stock  Room  you  have  knife  grinding,  wrap- 
ping paper,  twine,  etc.,  repairs,  and  other  small  ex- 
penses. 

In  Machine  Composition  you  have  oil,  gasoline  or 
gas,  metal  waste,  repairs,  etc.  The  metal  waste  on  a 
typesetting  machine  is  a  big  item.  It  is  asserted  that 
metal  deteriorates  at  the  rate  of  20  per  cent  per  annum. 
Of  course  this  depends  largely  upon  the  amount  of 
metal  in  use,  and  how  often  it  is  remelted.  The  value 
of  the  amount  of  the  metal  on  hand,  at  current  prices, 
should  be  ascertained,  and  a  proper  charge  made  for  the 
waste.  In  the  smaller  plants,  probably,  12  to  15  per 
cent  per  annum  of  the  metal  value  would  cover  this 
waste.  One-twelfth  the  annual  amount  should  be 
charged  the  department  each  month.  All  repairs  should 
be  charged  to  this  department  as  made. 

On  Hand  Composition,  there  is  benzine  and  lye  for 
washing  type,  proof  paper  and  twine,  and  other  small 
expenses. 


TOTAL  OF  SHOP  EXPENSES  81 

The  Cylinder  Press  requires  oil,  rollers,  tympan 
paper,  rags  and  other  items,  which  are  an  expense  to 
this  department.  There  is  always  a  loss  of  time  with 
poor  rollers,  and  enough  should  be  charged  to  cover 
the  buying  of  proper  rollers  so  that  good  work  can  be 
done. 

On  the  Job  Presses  there  will  be  the  same  items  of 
expense  as  on  the  cylinders  and  the  same  disposition  is 
made. 

The  Bindery  uses  glue,  paste,  brushes,  gas  or  gaso- 
line to  heat  the  glue,  and  the  knife  of  the  paper  cutter 
needs  sharpening.  These  items  all  enter  into  your 
costs. 

After  ascertaining  the  direct  department  expenses 
the  amount  should  be  brought  forward  and  entered 
under  the  right  department  heading  and  on  line  en- 
titled "Direct  Department  Expense." 

The  departmental  columns  should  then  be  added  up 
and  the  total  entered  on  the  line  "Total  Department 
Cost  Without  Office  Expense."  This  will  give  the 
amount  of  the  cost  of  the  different  departments.  You 
have  still  the  cost  of  the  office  overhead  or  adminis- 
trative burden  left  to  be  distributed  against  the  depart- 
ments. 

Distribution  of  Office  Expense:  Right  here  is 
where  a  large  amount  of  beading,  brackets,  wainscoting 
and  other  fancy  trimmings  can  be  added  to  the  build- 
ing now  nearly  completed.  In  the  large  plants  there 
are  several  classes  of  expense  which  should,  techni- 
cally, be  distributed  on  different  bases  to  obtain 
accurate  results.  In  the  small  and  medium  plants 
there  are  practically  none  of  the  classes  of  expense 


82  THE  PRACTICAL  COST  SYSTEM 

which  would,  in  the  large  plants,  technically  require  a 
different  base  for  distribution.  Nearly  all  the  expenses 
in  the  smaller  plants  have  a  direct  relation  to  the 
product  which  is  salable,  or  chargeable,  hours  so  the 
base  of  distribution  here  used  is,  to  all  intents  and 
purposes,  technically  correct.  As  the  Practical  Cost 
System  is  intended  more  particularly  for  the  medium 
and  small  plants,  and  as  we  desire  to  make  it  as  simple 
and  easily  handled  as  possible,  we  very  strongly  advise 
that  this  item  of  office  expense  be  distributed  against 
the  departments  on  the  basis  of  the  chargeable  hours 
of  each  department.  This  method  is  much  the  simpler 
and  fully  as  accurate. 

We  have  figured  the  summaries  in  a  number  of  the 
medium  and  small  plants  in  all  the  various  ways  and 
we  find  this  simple  method  is  as  fully  accurate  as  the 
others  and  that  the  variations  in  the  hour  costs  found 
as  between  this  method  and  the  others  is  too  small  to 
be  of  any  real  moment,  as  it  amounts  to  less  than  a 
quarter  of  a  cent  on  the  average  hour. 

We  have  now  reached  the  chargeable  hour  again. 
On  the  line  reading  "Chargeable  Hours  of  Each  De- 
partment," place  the  number  of  chargeable  hours  as 
given  in  the  pay  roll  summary.  The  costs  are  ascer- 
tained according  to  the  chargeable  hours,  and  the 
chargeable  hour  is,  therefore,  the  unit  or  factor  that 
determines  the  cost  of  your  product. 

Enter  the  number  of  chargeable  hours  on  the  line 
"Chargeable  Hours  of  Each  Department,"  and  in  the 
proper  department  column.  Total  these  hours  and 
divide  the  amount  of  "Total  Office  Expense"  by  the 
total  number  of  the  chargeable  hours.  This  will  give 


AVERAGING  MONTHLY  COSTS  83 

the  hour  cost  of  the  office  overhead,  or  the  hour  unit 
of  office  cost.  Multiply  the  number  of  chargeable 
hours  of  each  department  by  this  unit  which  gives  the 
amount  of  office  expense  to  be  charged  against  each 
department.  Total  these  amounts  and  if  this  total  is 
not  the  same  as  the  total  of  the  office  expense,  make 
such  slight  changes  in  the  departmental  amounts  as 
may  be  necessary  to  make  them  agree. 

Now  find  the  total  department  cost  by  adding  the 
two  amounts,  in  each  departmental  column,  of  "Total 
Department  Cost  Without  Office  Expense"  and  "Dis- 
tribution of  Office  Expense."  This  amount  represents 
the  total  overhead,  both  shop  and  administrative. 

The  hour  cost  of  each  department  may  then  be 
found  by  dividing  the  "Total  Cost  of  Departments"  by 
the  chargeable  hours  shown  for  each  department.  In 
finding  the  hour  cost,  if  there  is  a  fourth  of  a  cent  or 
more  fractional  remainder,  add  the  full  cent  to  the 
hour  cost. 

If  this  work  has  been  done  correctly  and  no  details 
of  expense  omitted,  you  will  now  have  the  accurate  de- 
partmental hour  costs  in  your  own  plant.  These  will 
enable  you  to  fill  out  the  Job  Record  summary  of  job 
costs  with  authoritative  figures  from  which  there  can 
be  no  appeal.  It  will  then  only  be  necessary  to  add  to 
the  cost  of  a  job  whatever  amount  you  consider  to  be 
necessary  as  a  profit  and  thus  get  the  selling  price  of 
the  job. 

Average  Hour  Costs :  When  you  have  obtained  the 
hour  costs  for  the  first  month,  in  each  of  your  depart- 
ments, they  will  be  entirely  reliable  for  use  as  a  basis 
of  obtaining  your  job  costs  and,  consequently,  the 


84  THE  PRACTICAL  COST  SYSTEM 

selling  price  of  your  product  for  the  second  month. 
When  the  hour  cost  has  been  obtained  for  the  second 
month,  we  advise  the  averaging  of  the  hour  costs  for 
the  two  months  for  use  in  figuring  job  costs  during  the 
third  month. 

In  getting  the  average  hour  costs  for  the  two 
months  do  not  add  these  hour  costs  together  for  each 
department  and  divide  by  two,  as  that  will  not  give 
you  the  true  average.  This  method  is  merely  aver- 
aging averages  and  is  not  mathematically  correct.  The 
true  way  of  obtaining  the  average  hour  cost  is  as  fol- 
lows :  Taking  for  example  the  department  of  hand 
composition,  add  together  the  total  "cost  of  depart- 
ment" for  the  first  and  second  months.  Divide  this 
amount  by  the  total  productive  hours  for  the  two 
months.  The  result  will  be  the  actual  average  hour 
cost  for  these  two  months.  Do  the  same  with  each  of 
the  departments. 

At  the  end  of  the  third  month  find,  by  the  same 
method,  the  average  hour  cost  for  the  three  months. 
Repeat  this  process  each  month  during  the  first  year 
of  the  use  of  the  system.  You  will  then  have  your 
average  hour  costs  for  the  preceding  twelve  months. 
At  the  end  of  the  thirteenth  month  drop  the  figures 
representing  the  department  cost  and  productive  hours 
of  the  first  month  and  in  their  place  use  the  department 
cost  and  productive  hours  of  the  thirteenth  month.  At 
the  end  of  the  fourteenth  month  drop  the  same  items  of 
the  second  month  and  use  those  of  the  fourteenth 
month.  Continuing  this  month  by  month,  you  will 
always  have  an  average  hour  cost  for  the  preceding 
twelve  months. 


AVERAGE  COVERS  VARIATION  85 

The  reason  for  using  these  average  hour  costs  is: 
That  during  some  of  the  months  of  the  year  your  pro- 
ductive hours  may  very  materially  fall  off,  thus  largely 
increasing  your  hour  costs  for  that  month.  During 
other  months  of  the  year  you  may  be  rushed  with  work 
and  your  productive  hours  will  greatly  increase  which 
will  make  your  hour  cost  for  that  month  lower.  You 
can  readily  see  that  if  an  active  month  is  followed  by  a 
month  of  low  production,  that  you  will  be  losing  money 
in  using  your  low  hour  cost  for  making  selling  prices 
during  the  month  of  smaller  production.  The  reverse 
of  this  is  also  true.  By  averaging  these  hour  costs  for 
a  series  of  months,  the  Exceptionally  high  and  the  ex- 
ceptionally low  monthly  hour  costs  are  both  absorbed 
in  the  average  hour  costs.  This  gives  an  hour  cost 
which  is  wholly  safe  to  use  in  establishing  selling 
prices  for  the  product  of  your  plant,  as  it  covers  all 
changes  in  production  costs.  This  method  of  averaging 
the  hour  costs  also  provides  for  a  gradual  increase  in 
cost  caused  by  increase  in  labor  cost,  or  an  increase  in 
material  cost  or  in  rent.  It  would  also  equally  well 
provide  against  any  reductions  in  the  cost  of  doing 
business ;  so  that  there  will  be  neither  a  sudden  increase 
in  your  hour  costs  nor  a  sudden  decrease. 

While  finding  the  average  cost  entails  a  little  more 
work,  it  still  amounts  to  but  a  few  minutes  each  month, 
and  it  provides  a  measure  of  safety  and  protection,  both 
for  yourself  and  your  customer,  which  renders  it  well 
worth  while. 


CHAPTER  IV 


PROFITS  OR  LOSSES 


The  cost  structure  is  now  finished ;  you  have  ascer- 
tained what  the  hour  cost  is  in  your  own  plant  and  by 
carefully  studying  the  result,  many  leaks  that  appear 
can  be  traced  and  stopped.  If  the  hour  cost  of  a  depart- 
ment seems  too  large,  or  is  greater  than  the  average  in 
other  plants,  about  the  only  known  and  practical 
remedy  for  that  condition  is  to  get  more  work  for  that 
department  with  a  consequent  increase  of  its  pro- 
ductive hours.  The  hour  costs  found  by  the  working 
of  this  Practical  Cost  System  are  absolutely  accurate 
and  correct  under  the  existing  conditions  in  your  plant. 

The  Right  Price:  A  printer  needs  only  deter- 
mination and  backbone  to  get  the  right  price  for  his 
work  and  be  sure  of  a  profit  on  all  work  done.  What 
is  a  just  profit?  The  general  opinion  is  that  25  per 
cent  of  the  cost  is  about  right  on  the  general  run  of 
work  in  the  smaller  plants.  That  means  a  one-fifth 
or  20  per  cent  net  profit  on  the  selling  price. 

Profit  and  Loss:  For  a  further  statement  of  the 
details  of  the  business,  and  to  put  on  an  extra  finishing 
touch,  we  have  added  a  "Statement  of  Profit  and  Loss/' 


FINDING  PROFIT  OR  LOSS  87 

This  is  a  simple  little  form  that  is  certainly  an  eye- 
opener.  Illustration,  cut  number  11. 

All  the  job  records  that  have  been  completed  the 
previous  month  are  taken  and  their  amounts  added  and 
the  total  amount  shown  entered  on  the  line  provided. 
The  total  amount  of  advertising  for  the  month  is 
entered,  then  the  total  amount  received  on  subscrip- 
tions. These,  with  miscellaneous  receipts,  which  are 
not  usual  but  may  sometimes  appear,  are  then  totalled, 
which  gives  the  total  receipts  or  the  gross  amount  of 
business  done  for  the  month.  The  total  amount  of  the 
stock  used  for  the  month,  including  ink  as  shown  by 
the  job  records,  which  will,  of  course,  include  the  stock 
and  ink  used  for  the  newspaper,  is  then  deducted  from 
the  gross  amount  of  business.  This  gives  the  gross 
profit,  and  from  this  must  be  deducted  all  the  expenses 
as  shown  by  total  of  column  headed  "Total  Disburse- 
ments" in  the  statement  of  cost.  The  result  will  show 
whether  you  have  made  any  real  money  or  not.  If 
you  do  not  publish  a  newspaper,  the  part  pertaining 
to  it  need  not  be  taken  into  consideration. 

Another  statement  form  is  that  of  profit  and  loss  as 
shown  by  job  tickets.  Every  job  record  has  a  place  for 
profit  or  loss.  Add  these  items  up  as  shown  by  the 
job  records  for  the  month,  deduct  the  losses  shown  on 
the  job  records  and  you  can  easily  see  what  the  result  is 
and  whether  the  job  end  of  the  business  has  made  a 
profit  or  a  loss. 

To  find  whether  you  are  making  or  losing  money  on 
your  newspaper,  take  the  job  records  showing  the  cost 
of  your  paper  for  the  month,  then  figure  the  amount  of 
your  advertising,  add  the  amount  received  on  subscrip- 


88  THE  PRACTICAL  COST  SYSTEM 

tions  to  this  and  deduct  the  cost  of  producing  the  paper 
and  you  will  then  know  whether  the  paper  is  a  paying 
or  losing  game,  and  what  you  will  have  to  do  to  make 
it  pay  if  it  shows  a  loss. 

The  Newspaper:  The  printing  of  your  newspaper 
should  be  like  the  printing  of  any  other  job  in  your 
office.  A  job  ticket  should  be  made  for  every  issue, 
daily  or  weekly,  and  all  the  time  used  on  the  paper,  and 
all  the  extras  such  as  plate,  ready-prints,  editors'  and 
reporters'  salaries  or  the  portion  of  the  proprietor's 
salary  for  the  time  he  may  spend  in  editorial  work 
should  be  charged  directly  to  the  job  record.  This  will 
give  the  cost  of  the  paper,  issue  by  issue.  It  is  not 
possible  to  run  a  system  satisfactorily  any  other  way, 
and  you  cannot  get  your  correct  hour  costs  without 
treating  the  newspaper  just  as  though  it  were  an  out- 
side job. 

Paying  Investment:  If  you  will  take  the  time  to 
build  your  cost  system  and  to  keep  its  records  accu- 
rately you  will  find  it  the  best  paying  investment  you 
ever  made,  for  no  work  you  can  possibly  do  will  bring 
you  better  returns  for  the  time  required  and  money 
invested. 

A  Larger  System:  This  system  here  described  is 
especially  suitable  for  the  small  and  medium  sized 
offices  of  ten  or  less  shop  employees,  where  the  owner 
desires  to  operate  a  cost  system  without  the  need  of 
calling  in  an  expensive  cost  expert.  In  fact,  the  ser- 
vices of  a  cost  expert  are  wholly  unnecessary,  for  with 
this  Practical  Cost  System,  if  the  user  will  but  give 
these  instructions  close  study  and  proceed  with  the 


EXPERTS  SOMETIMES  WRONG  89 

work  step  by  step,  as  here  indicated,  he  cannot  fail  to 
get  the  accurate  hour  costs  for  his  shop. 

Large  offices  will  probably  find  it  a  paying  invest- 
ment to  hire  an  expert,  although  this  Practical  Cost 
System,  with  the  use  of  more  and  larger  forms,  can 
readily  be  installed  and  operated  by  anyone  who  has  a 
fair  knowledge  of  the  principles  underlying  the  science 
of  cost-finding. 

A  great  many  experts  who  do  not  thoroughly  under- 
stand cost-finding  work  nor  cost  systems  have  entered 
the  field  and  printers  should  be  warned  that  incapable 
cost  men  do  more  harm  than  good. 

Should  you  desire  to  extend  your  knowledge  of 
figuring  and  finding  costs  or  to  learn  of  short  cuts,  or 
to  extend  your  knowledge  of  the  principles  involved, 
send  for  Mr.  Forte's  book  "How  to  Figure  Costs  in 
the  Printing  Business." 


INDEX 


Page 
Advertising 

Hand  Composition  on 34 

Machine  Composition  on 36 

Of  Business 76 

Work  number  of 34 

Alterations 

Authors' 34 

Hand  Composition,  what  are 34 

Machine  Composition,  what  are 35 

Attached  Folder 

Classification  of   43 

Feeder,   as  press  assistant 41 

Feeder,   time   of 41 

Feeder,   wage  of 41 

Automatic   Feeder 

Classification   of 41 

Time  on,  how  kept 41 

Bindery 

Little  used 12,  43 

Binding 45 

Classification  of  work 43-46 

Expense,  distribution  of 81 

Folder,  attached,  time  on 41,  44 

Folder,  hand  fed,  time  on 43,  44 

Folding,  hand 43,  44 

Folding,  machine 43,44 

Inventory  of 62 

Work  numbers  of 43 

Work  of 43 

Burden 

Diagram    of    5 

Elements  of 6,48 

Business 

Bad  accounts  in 74 

Borrowed  money  for 78 

Expansion,    capital    for ....  78 

Profit   or   loss,    found 86,  87 

Changes 

Authors 34 

On  press 40 

Chargeable  Time 

Definition  of 17,  48,  59 

Distribution  of 82,  S3 

Record  of 55,  58 

Classification 

Automatic    fed    jobber 41 

Bindery 46,  47 

Folder,   attached    41 

Folder,  hand  feed 41,  44 

Paper  cutter 4o,  63 

Presses,    cylinder 39,  41 

Presses,  platen 39,  41 

Presses,  proof    63 

Clock 

Unit  face  for 1« 


Page 
Commissions 

Agents .76,  77 

Disposition  of 77 

Newspaper,  on 77 

Composing  Room 

Expenses,  list  of 80 

Inventory  of 63 

Sink  hole,  was 32 

Work   numbers    of 33 

Work  of 33 

Composition 

Alterations 34,  35 

Clean  up,  hand 87 

Clean  up,  machine 38 

Corrections : 

Non-chargeable 37 

What  are 37 

Distribution: 

Non-chargeable 37 

What  is .27 

Time  of sa 

Time,  guessing  at 32.  33 

Work  of 33,  31 

Cost  of 

Departments,  how  found 81,  82 

General  relations 5 

Handling  stock 29 

Labor  hour 65 

Job,    relation    to 4 

Production 5,  18,  50 

Statement  of 59-82 

Summary  of 59 

Cost  Clerk 

Extending   time 48,  49 

Ring  time,  auto  feeder 42 

Ring  time,  bindery  work 49,  52 

Ring  time,  cylinders 49 

Ring  time,  stock  room 49 

Ring  time,  linotype    38,  52 

Cost  Experts 

Mistakes  of 66 

Needless,  this  system 2,  88 

Warning 89 

Cost   System 

Larger  form 1,  88 

Need  of 1 

Now  in  use 2 

Paying  investment 88 

Custom  of  Trade 

Handling  stock 29 

Cutting  Stock 

Combination,   handling    31,32 

Losses  on 28,  29 

Why  chargeable 28 


92 


INDEX 


Page 
Cylinder  Presses 

Classification  of 41 

Feeder,   time   on 40 

Inventory  of 63 

Ringing  time  on 42,  49 

Daily  Time  Ticket 

Accuracy  of '. 14 

A  sales  record 18,  20 

Explanation  of 20-26 

Extension,   time  on 42,  47-8-9 

Extension  to  hour   record 55,  58 

Improved  form 24 

Reason  for 15,  17 

Working  of 20 

Work   numbers   on 23,  26,  48 

Delivering; 

Chargeable  to  office 27,  28 

Chargeable  to  stock 31 

Time  ticket  for 31 

Departments 

Classification  of  .  .   14,  25,  32-47,  55 

Cost  of,  how  found 81,82 

Direct  expense  of .  80,  81 

Labor  cost  of 6  5 

Pay  roll,  summary  of .  .  .  G  4 

Depreciation 

As  replacement 72 

Bases  of 72,  73 

Distribution  of 74 

Rate  of 7^ 

Why  used 72 

Diagrams 

Expense  relations 5 

Job  of  printing,  costs 3 

Distribution 

Chargeable  time 47,  48 

Composing  room 37 

Department  investment 62,63 

Ditto,  interest  on 71,  72 

Depreciation 74 

Direct  expense 80,  81 

General  expense 74-79,  81-85 

Heat 66,  67 

Insurance 71 

Interest: 

On  borrowed  money 78,  79 

On  investment 71,  72 

On  purchase  contracts 78,  79 

Light 68 

Miscellaneous  expense 79 

Office  expense 74-79,  81-85 

Pay  roU 5,  6,  64 

Power 5,  69 

Rent 67 

Selling  expense 77 

Spoiled  work 75 

Taxes 71 


Page 
Efficiency 

Of  employees 18 

Of  equipment 18,  19,  20,  33 

Of  management 18 

Envelope 

Job.   explanation   of 9-13 

Job,  copy  in 14 

Expenses 

Direct  department 80,  81 

General 74-79 

Miscellaneous 79 

Office 74-79 

Power,  relation  to 5 

Experts 

Cost,  mistakes  of 66 

Cost,  needless 2,88 

Cost,  warning 89 

Extending:    Time 

On  job  record 50-54 

On  job  tickets 47,  48 

To  hour  record 55-58 

Feeder 

Auto,  press,  time  on 41,  42 

Cylinder,   time  on 40 

Folder,  time  on 41 

Press  assistant 40 

Fly  Sheet 

As  job  record 12,  50 

Job  ticket,  part  of 12 

Kept  in  office 12 

Folder 

Attached,  time  on 41 

Inventory  of 63 

Separate,  time  on 43,  44 

General  Expense 

List  of 74-79 

Handling;  Stock 

Cost  of 29 

Inventory 64 

Losses  of 29 

Hour  Cost 

Average 83-85 

How  found 83 

Relation   to  newspaper 88 

Inventory 

Installation  cost,  part  of 62 

Items  of 63,  64 

Present   cost   used 63,  64 

Valuation  bases 63,  64 

Investment 

Amount,  how  found 62 

Department 62,  63 

Interest  on 71 

Valuation  bases 62 

Interest 

Distribution  of 71,  72 

Time  burden 4,5 

Use  in  cost  system 4,  5,  71,  78 


INDEX 


93 


Page 
Insurance 

Distribution  of 71 

Impression* 

Record  of 39 

Job   Costs 

Diagram  of 3 

How  found 50-54 

Record  of 50-54 

Total  of 52,  53 

Job  Envelope 

Description  of 9 

Fly  sheet,  part  of 12 

Simple  form  of 9-13 

Use  of 9-13 

Job  of  Printing 

Diagram  of 3 

Progress   in   plant 3,4 

Cost  on 50-54 

Job   Presses 

Automatic  fed 41 

Classification  of 39,  41 

Inventory  of 63 

Job  Record 

Advantage  of 54 

Form  of 51 

Profit  and  loss  from 50-54 

Time  to 50-56 

Use  of 50 

Job  Register 

Description  of 7,8 

Job   Ticket 

Explanation  of 9-13 

Labor 

Burden  on 3,4 

Cost  of 4,  20 

Cost  of,  to  find 65 

Hours,  cost  of 83 

Supervision  of 65,  66 

Leaks  and  Losses 

Alterations 34 

Bindery 43 

Cutting  stock 28 

Guessing  time 33 

Handling  stock 29,  30 

Inefficiency  of  plant 29,  30 

Proprietor,  work  of 6,  27 

Spoiled  work 75 

Trimming 43 

Wasted  time 20 

Light 

General  expense  only 68 

Power  from,  wires 70 

Newspaper 

Advertising  job  work 76 

As  a  job 88 

Commissions  on 77 

Direct  expense  on 77,  88 

Profit  or  loss  on,  how  found.  .  .  .87,  88 
Relation  to  hour  cost 88 


Page 
Non-chargeable  Hours  — 

Burden  on  labor 4,  48T66 

Not  salable 59 

Record  of 48,  55-58,  68 

Unavoidable 18 

Office   Expense 

Distribution  of 74-79,  81-85 

Office  Work 

Delivery  as 27,  28 

Description  of 26-28 

Non-chargeable 42,  61,  62 

Organizations 

Dues  to 78 

Necessity  of 78 

Overhead 

Administrative 5,  6,  74-79 

Diagram  of 5 

Elements  of 5,6 

Office  expense  as 6,  74-79 

Part  of  cost 6 

Pay  Roll 

Hour  cost  of 65,66 

Office,  disposition  of 5,  6,  77 

Proprietor  on 5,  6,  65 

Shop,  distribution  of 5,  64 

Percentage 

Handling  stock  on 30 

Wrong  principle  .  .  . 30 

Plant  Inventory 

Basis  of  value 62 

Items  of 63,  64 

Power 

Distribution  of 5,  69 

Division  of 68 

From  light  current 70 

From  one  motor 69,70 

From  gasoline  engine 68,  70 

Press   Room 

Auto,  feeder 41 

Classification  in 39-41 

Inventory  in 63 

Number  impressions 22 

Production  Cost 

Labor,  relation  of 66 

Office  expense  part  of 4,  5 

Shop  expense  part  of 4,  5 

Profit   and   Loss 

Job  work,  how  found 50-54 

Newspaper,  how  found 87,  88 

Summary  of 86,87 

Proofs 

Exception,  chargeable 36 

Pulling,  non-chargeable 36 

Reading,  non- chargeable 37 

Proprietor 

Salary  of 6,  65 

Shop  work  of 6,  27,  65 


94 


INDEX 


Page 
Record 

Chargeable  hours 55-58,  66 

Hours,   extension  to 55-58 

Job  record 50-56 

Rent 

Distribution  of 67 

How  to  find 67,  68 

Replacement 

Fund  for 73 

Why  needed 72,  73 

What  it  is 72,  73 

Ringing  Time 

Cylinder  press 42,  49 

Stock  work 49 

Type  setting  machine 49 

Salaries 

General  office 4,  5,  77 

Proprietors 4,  5,  77 

Stock  Room 

Cutting,   cost  of 28,  31,  32 

Delivery,  work  of 31 

Handling  stock 29,  31,  32 

Unpacking  and  shelving 31 


Page 

Summary  of  Cost 

Job  record 54 

Plant,  total  of 59 

Time 

Burden  on 4 

Chargeable 55 

Element  of  cost 18 

Non-productive 18 

Unit  of 15,  16 

Time  Ticket 

Explanation  of 14 

Illustration  of 19,  21,  23 

Reason  for 15,17 

Working  of 20 

Type    Setting   Machine 

Cleaning 33 

Inventory 63 

Power,  to  find 70 

Work,  Classes  of 

Bindery 26,  43-47 

Composing  room 25,  33-37 

Office 26,  27 

Stock  room 25,  26-32 

Work  numbers 25,  26 


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50c  per  volume  after  the  third  day  overdue,  increasing 
to  $1.00  per  volume  after  the  sixth  day.  Books  not  in 
demand  may  be  renewed  if  application  is  made  before 
expiration  of  loan  period. 


APR  24  192b 
29MAR'5ICM 


25m-7/25 


VB  ,'8474 


576246 


UNIVERSITY  OF  CALIFORNIA  LIBRARY 


